Just a Story About eight years ago I befriended a coin dealer at a local Flea Market. A good man who has passed away. He was from Finland and a goose hunter. His passion was to have young childern find the excitement of coin collecting. I watched him give away coins and booklets to hold them. Week after week they would return to purchase a coin and his advice given to these new collectors. We became good friends and I would watched his store for him. Then one day he showed a vile of 1921 morgan silver dollars. and asked if I wanted to purchase them at $6.00 a piece. They were MS60 T0 63. Eventually Peace dollars 1922 to 24 of same condition were offered to me. Now they were common dates and reguardless of the price they are a sight to see spread out. I still go to the same flea market and another coin dealer has taken his place. His coins are now $12.00 and are of lesser grade. As for Pete's Place. A computer geek has now set up shop.
Slingshot-----------------<>

WASHINGTON, Aug 1 (Reuters) - A gold bar exhibited in the Smithsonian's National Museum of American History as a relic of the 19th century California gold rush has been exposed as a fake, a specialist magazine reported on Friday.

Scientists compared the museum piece to ingots recovered from a ship that sank off the coast of California in 1857 while carrying thousands of gold rush coins and bars, according to a study published in the August issue of Numismatist magazine.

The bar, a gift from the estate of pharmaceutical tycoon Josiah Lilly, was revealed to be of modern origin. Bob Evans, the geologist who coordinated the investigation, said in a statement that Lilly had not known the bar was a forgery.


Black Blade: Sure took a lot of trouble to fake a "barbarous relic" eh?

http://quote.bloomberg.com/apps/news?pid=10000006&sid=adrOOwsfj1_w&refer=homeAfter restating 72.000 lost jobs instead of the 30.000 number stated i June, in July an additional 44.000 jobs have been lost instead of the expected improvement of 10.000 jobs.
Unemployment contracted to 6.2% vs 6.4%, due to less people looking for jobs. Kind'a bizarre, though they may be vacationing instead, as finding an adequate job is becoming
more like a lottery ticket.

Not good news for the SM's, Bonds, Mortgage and the Dollar. BB's axiom of getting out of debt, storing essentials and gold is proving the best advice ever ... cb2

http://www.marketpredict.net/reportpage2.htm There have been rumors that a big time buyer of silver has recently entered the market. I wonder if the price of silver could have moved as well as she has lately without the emergence of such rumors. I'm not suggesting that the rumor moved the price higher but rather I'm thinking that any such price move, no matter how instigated, will produce the rumors regardless of what the truth may be.

Confirmation of large amounts of money going long silver will be a sight to behold but I remember that Buffett was skillful enough to buy 89 million ounces before his presence was revealed. Has someone been stealthfully buying for a long time or has long side interest just been recently created by the move through that 480-485 level?

Sinclair has announced that his opinion of silver has just turned bullish but he didn't offer any substantiating thoughts. David Morgan has also reported rumors of big money interest in silver. Ted Butler is still complaining about the huge number of Comex contracts, more than can possibly be settled with physical delivery. He also opines that a sizeable move in the POS could cause stress in the derivatives markets. There's always stress associated with the obligation involved with writing options. Why he thinks these are mostly naked options and that the margin system will fail is beyond me. The futures' markets are a zero sum investment casino rather than a vehicle in which the majority of investors can gain, like stock equities. Is this one reason why so many think that the system is subject to default? I once watched natural gas increase in price (not too long ago) by a factor of four in a very short time causing problems in California but there was no metldown of exchange traded derivatives. As always, whatever is done OTC in private shady dealings is a horse of another color.

Also, as always, imho the safest, surest way to benefit from the coming price appreciation of gold and silver is simply to buy physical metal. Leveraged investments require leveraged risk. Most investment analysts agree that, simply put, outrageous profits necessitate tremendous risk.
Rich

"There's nothing more powerful than an idea whose time has come."

So what of power and timing?

It's the difference between *riding* in a rocket from the pad, or else trying to *catch* one as it goes by. Got the picture?

Gold. Get the idea, get you some. --- Aristotle (still lovin' it cheaply heavy)

Something very peculiar going on in the DOW AND S&P .

Here's the news

*ECB recommending against holding Freddie Mac Debt
*Banks selling assets ; 11 % last week
**BONDS in a rout
*US govt to sell 60 billion more next week / losses mounting
*WE lost a whole lot more jobs in July
*CONsumer confidence down big to a 4 month low....
*INsider selling for the past couple of months is very high
*Record US trade deficits
*Record US budget deficits
* Dollare in a huge slide
Stock markets pushing toward recent highs this week....
SOMEONE WANTS TO SELL AND SOMEONE (WHY?) IS ALSO buying in this economic backdrop.. PERHAPS the banks are dumping again this week and their brothers at the MUTUAL FUND cos are buying their poop....

Mind you that Pe multiples on stocks are I believe again at their highs......

but their is an added wrinkle this week ...and you can't hide an elephant under a rug indefinitely without someone finally noticing...there is a bulge...

THE BULGE is showing up in the volume and open interest figures on the S&P and the DOW..for the past 6 trading sessions both are rising ...the open interst is rising dramatically .Why? OPEN INTEREST is number of futures contracts / Larry Williams has stated that large Commercials make the futures markets move....THeir predominant position is short....When the commercials in a particular arena believe the the market price is going to go down in a specific commodity ( and they are usually in a position to know cause their buying of that product in the real world makes the price go up and down) they increase their short postions and as a result the open interest figures increase. If they think the price of the commodity is going to go up (BARRICK AND THE PRICE OF SILVER / reducing its hedges is an example : this doesn't show up on the Comex numbers (stealth) because their postions are derivitives {non reportable}) they reduce their short positions and that then becomes reflected in the open interest figures...that's the theory....

Derivitives have become a great way for the BIG BOYS to conceal from the public eye what they are doing so that people like Larry WIlliams who tries to walk in the footsteps of giants may not see figures in a reportable form.

According to WIlliams ' theory the trebling of open interest in the past week in the DOW or S&P is speaking large .....and according to the theory someone is making big bets that the price of the S&P and the DOW are getting ready to go down....WE WILL SEE?

SOROS said he's selling dollars
BUFFET said that theres nothing out there worth buying
in this market.....

TIM WOODS says that a close below 8850 on the DOW will be confirmation that 9350 was a seasonal top and we're headed down....this ia also in keeping with the time of year being the time that these things continue to seem to be unfolding.

http://www.usagold.com/gold/coins/bullion.html

Trying to push gold below 350 ... Nada, no go.

Haven't seen the PM shares acting so well in a while. Even if 350 would succumb to the CABAL, an entity which is losing its grip on the bond, the sm's, and after all on gold - let 'em have their day. It may be the last few days for the PPT to celebrate.

Everything and reality is working against these artificially construed markets. I feel it in my bones - game's over!

Go gold - cb2

Even if the Bop came half an hour later - it still smacks of desperation ... will be buying more.

Cabal - thanks for the unexpected opportunity - truly your's
cb2

The little word omitted, should have lent some substance at the appropriate position in my last post :>) - cb2

Gandy thnx for the response,that was a good explanation.Cobra I was just about to make the same comment on the pm shares.I watch the mining stocks and sometimes they move like they have no link to the metal,no rhyme or reason at least to my neophyte brain.Energy issues they have gotten beat up lof late at least the ones I follow.That is something I do not understand,even the mainstream is recongnizing the energy problems that are fast approaching I thought energy funds and stocks would be moving up for a long time to come.Well as J.Livermore said the tape is never wrong.

I know there are silver people and there are gold people,just like there are cub fans and there are white sox fans.Then there are the oddballs like me who like both,but no matter your preference you have to admit silver has shown its strength lately.21

"So, we see silver is getting restless. WEll,...., we've been watching long enough to know that silver may go up soon, or it may not, or it may fall back to 4.28 or some ridiculous figure. In the l-o-n-g run, it will soar. So, we just have to wait and see.

"It does seem encouraging when an article that favors silver appears on Dow Jones News Services.

"W...., I have this feeling that INFLATION is going to suddently raise it terrifying head and there will be nothing that can be done to put it back in its box. Inflation was put in a box back in 1979 by Paul Adolf Volcker, ALL these years, the USA has coasted on the reputation that Volcker built for the dollar as a sound currency, by putting up interest rates that took Prime Rate to 21% - which I paid and a lot more, according to covenants, when managing ........ It set the US back on its behind, but it did tame inflation and Reagan and all his successors have been living off the reputation the dollar then gained.

"Now, that's GONE!

"The turn around in bonds, and the collapse in the long-term bond prices (yield going up) has been sudden and must have caused enourmous damage. I mean enormous. This is the sign that things have changed, and they won't get better in our lifetimes, I am much afraid.

"Hang on, the inflation ride is going to be really something."
******
So gold has plunged today. Just shows how much panic there is in high places. The bond collapse is mighty and now I think we have seen a historic marker. No matter that gold, with its really PUNY market, has not been allowed to register the disaster. The disaster is there, it is real, it cannot be erased. The bond market is 10 times larger than the stock market - so this old bat has read.

This collapse in the bond market is a nail in the coffin for millions upon millions of older Americans, who were trying to keep body and soul together by relying on income from bonds. And even more importantly - who cares about old geezers, anyway? - now will inevitably follow the end to the junkie habit of the boomers of refinancing the home to extract more money to keep the debt tiger at bay. Now what? Now, it's reality at the door....

"Mine eyes have seen the Glory of the Coming of the Lord;
He is tramling out the vintage where the grapes of wrath are stored;
He hath loosed the fateful lightning of His terrible swift sword;
His truth is marching on.

"Glory! Glory! Hallelujah! Glory! Glory! Hallelujah
"Glory! Glory Hallelujah! His truth is marching on."

Not that I am a very religious bat. No. It's just that the magnitude of what has happened, and what it portends, induces solemnity. A minute of silence, Ladies and Gentlemen, for the passing of the Dollar.

And the sword about to descend upon the US and the world: it is made of solid gold.

This tired old GAB.

Gandalf, one more question at the end of this month I am coming in to what is for me a nice chunk of money I am going to use some to purchase some coins.I do not think I will purchase bullion coins as I feel secure in the amount I have.If I use 1000 dollars to purchase collectible coins what would be your suggestion,I was figuring to purchase between one to five coins either silver or gold or combination,what coins in your or any forum members opinion offer the most potential for growth and what do you see as a good buy right now.I will be purchasing from the forum sponsers as I need to give at least a little back for the knowlege I have gained here.21 P.S. every thing I have read says to purchase highest grade you can afford, that the fewer high grade coins are better than alot of low grade coins.This is from a collecting stand point.

http://www.ecb.int/press/03/pr030801en.htm(ECB press release as amplified by DJ newswire)

To to take effect in the first quarter of 2004:

The timing of the reserve maintenance period will be changed so that it will always start on the settlement day of the main refinancing operation (MRO) following the Governing Council meeting at which the monthly assessment of the monetary policy stance is pre-scheduled. Furthermore, as a rule, the implementation of changes to the standing facility rates will be aligned with the start of the new reserve maintenance period.

(The maintenance period is the time over which commercial banks' deposits with national central banks are averaged.)

(Beginning on Jan. 24, 2004, the start and end dates of the ECB's reserve maintenance periods will be keyed to the schedule of meetings of the its governing council, rather than following a fixed monthly schedule with a start date on the 24th of a month and ending on the 23rd of a month. The maintenance periods will now vary in duration, generally between 28 and 35 days, but with longer periods at the start and the end of the year of 46 and 43 days, respectively.)

The maturity of the MROs will be shortened from two weeks to one week.

(The last main refinancing operation with a two-week maturity will be allotted on March 2, and the first refi operation with a one-week maturity will be allotted on March 9.)

--------------

Just leaving a findable record here for my future reference if necesary.

R.

http://www.usagold.com/cpm/abcs.html

The ABCs of Gold Investing

"Without waxing philosophical, a few words are helpful concerning the mind-set with which you pursue your interest in gold ownership. Some enter the gold market to make a profit, others to hedge disaster, some to accomplish both. No matter into which category you fit, make sure you understand why you are going into the gold market. Convey that understanding to the individual with whom you are structuring your gold portfolio. The whys have quite a bit to do with what you end up owning.

"Frequently investors will say that any kind of gold will do because after all gold is gold, isn't it? This type of attitude has helped a great many coin shop owners unload unwanted inventory they hadn't been able to get rid of for years. This is probably a good deal for the coin dealer, but it could spell disaster for you. In the same vein, I have talked to hundreds, probably thousands, of investors in nearly a quarter century in the business. Quite often, potential investors have no more reason for buying gold than 'everybody else is doing it.'

"In Chapter 16 on portfolio planning, you will find some details on this important subject. For now, consider the inscription over the entrance to the temple of the ancient Delphic Oracle: 'Know Thyself.' Study. Read. Learn what's going on around you. Call a few gold firms and ask questions. There's nothing like conversation to stimulate thinking. Take time to lay a little groundwork. Then make your move. The political and economic situation being what it is, there is no better time to start than now. Know thyself -- your goals and needs -- and you will be a more confident, happier gold investor." (more)

Please Remember: It is your purchase from USAGOLD - Centennial Precious Metals that nourishes these pages.

http://www.house.gov/paul/congrec/congrec2003/cr072503.htmSnippit:
"Repeal of legal tender laws will help restore constitutional government and protect the people's right to a medium of exchange chosen by the market, thereby protecting their current purchasing power as well as their pensions, savings, and other promises of future payment. Because honest money serves the needs of ordinary people, instead of fiat irredeemable paper-ticket electronic money that improperly transfers the wealth of society to a small specially privileged financial elite along with other special interests, I urge my colleagues to cosponsor the Honest Money Act."

----------------------------------------------
Liberty Head

I have no illusions about Congress ever passing an Honest Money Act, however, as long as folks like Dr. Ron Paul can get elected, there is a ray of hope.

http://money.iwon.com/jsp/nw/nwdt_rt_top.jsp?cat=TOPBIZ&src=201&feed=reu§ion=news≠ws_id=reu-n01227824&date=20030801&alias=/alias/money/cm/nwHEADLINE: Gold producers cut hedges, disagree on philosophy

TORONTO, Aug 1 (Reuters) - North America's three big gold producers have slashed hedge books further this past quarter, and promised more cuts, but managements' philosophy on the contentious practice remains poles apart.

Executives at Newmont Mining Corp., Barrick Gold Corp. and Placer Dome Inc. used the opportunity of results week to pontificate on the pro's and cons of committing for sale still unmined ounces.

Always with camps of supporters and detractors, hedging has become an even bigger flashpoint over the past two years as the bullion price surged to six-and-a-half year highs.

Staunch anti-hedgers argue that companies with chunky forward sales programs lose out on the benefits of a long-awaited price revival as gold has already been sold, perhaps at lower prices.

Pro-hedgers say committing a portion of unmined ounces at a fixed price just makes prudent financial sense in a notoriously volatile market.

-----(see article at url for players and positions)------

While this is on the surface a debate on corporate cashflow from the management and shareholders' perspective, on a deeper, philosophical level it has relevance to physical gold owners -- that is, shall they enjoy true property rights, or shall their tangible property be subordinated to the fair-market-value associated with artificial supplies contracts and derivatives that give but lip-service to physical gold?

When confidence is shaken, in the end, reality rules the day. Choose to own gold instead of a leveraged bet on the price of a contract that may have no deliverable value.

R.

take a look at the volume and open interest for the DOW and the S&P in the DECEMBER CONTRACT ; its very dramatic

Sir 21mabry said, "every thing I have read says to purchase highest grade you can afford, that the fewer high grade coins are better than alot of low grade coins. This is from a collecting stand point."
===
The above thought is one that may be "TRUE", BUT can be interpreted a different way by any two people !
REMEMBER the three important items of Grading coins !
(one more time !! CONDITION CONDITION CONDITION!!!!!)
YES, a thousand old worn coins could be not worth the value of one nice old BU (MS60) coin ! I use the level of MS60 as my BASE desired level, but have many AU level coins that tell GREAT STORIES of their travels. (Have you considered trying to speak to your coins? (OOPS, I forgot that you are not a Wizard!)

I am sure that Centennial Precious Metals, can find you five nice SLABBED BU gold and silver coins, for the GRAND$.
If a Hobbit ask me for the same deal, I would offer him an US Double Eagle Saint (MS60+) and four (MS60+) Morgan and/or Peace Silver Dollars. I might of even included a CC-Morgan <;-) Just give USAGOLD a free call and find out what the special of the day is in SLABBED US Gold and Silver coins. I know, you will be pleased.
<;-)

http://money.iwon.com/jsp/nw/nwdt_rt_top.jsp?cat=TOPBIZ&src=201&feed=reu§ion=news≠ws_id=reu-n01544300-u1&date=20030801&alias=/alias/money/cm/nwHEADLINE: NY gold ends at 2-week nadir on hefty fund sales

NEW YORK, Aug 1 (Reuters) - COMEX gold futures plunged to a two-week low on Friday, pressured by aggressive fund selling that shoved prices through brittle chart support on the way down, dealers and analysts said.

Benchmark December gold on the New York Mercantile Exchange's COMEX division shed $8 to $347.80 an ounce...

"It was very heavy fund selling," commented one New York gold trader at a bank.

"It was pretty aggressive and the longs have to be disappointed," one metals market watcher said, noting that the selling accelerated as prices slid through the first support area at $351-$350 in December futures.

----(from url)-----

Contact Centennial today and build your financial base of tangible gold while its priced at the low value of NY's December paper gold.

R.

http://www.usagold.com/gold/coins/collector.htmlThis page might help. It offers a few representative images and contact info.

R.

http://www.usagold.com/DailyQuotes.htmlSnip:
"Gold dived in the last minutes of trade even as the equities markets dipped and the U.S. dollar weakened against major world currencies. Fund and speculator selling over the last couple of days as well as the "blow off" in the last few minutes of trade today cleared out a lot of "dead wood" as long positions were liquidated. The contradictory economic data has led to some confusion and that is not a good position for weak hands and short-term traders so many took profits and left the market. The real question is whether the market will rebound early in next week's Asian and European trading sessions as the lower price may attract more physical demand, bargain hunters and short covering."

From what I can tell, These drops like the one
into the 340s today have ceased to spread horror
in the gold community. A year ago I might have
felt uncomfortable. Today, I looked at it and actually
laughed right along with 'em today. I know darn
well they are wasting their time, and their money, as
there are so many leaks in the dike and so few fingers
that they can't plug them all. Sit back, pour yourself
a cold beer and enjoy the show - watching the arrogant
selling off their wealth for peanuts like this isn't
all that unpleasant of an experience. Heck, one might
even want to pick up some of the bargains they help
make possible.

http://biz.yahoo.com/rm/030801/iraq_gold_1.htmlTurning Gold into copper!

So, 2% drop is "volatility"?

Parlez-moi de Bonds, please.

Also, stocks.

the GAB

http://stockcharts.com/def/servlet/SC.web?c=$USB,uu[l,a]daclyyay[df][pb200][vc60][iUb14!La12,26,9]⪯f=GNice to see you hanging here again! A picture is worth a thousand words...

GoldquestFor some reason I didn't trust them when they believed it was gold and I don't trust them when they say it wasn't gold

http://cbs.marketwatch.com/news/story.asp?guid=%7BD19609F1%2D24D7%2D4EC9%2DBCA0%2D7C1B20C394D1%7D&siteid=mktwSnip:
"Crude for September delivery closed at $32.31 per barrel on the New York Mercantile Exchange, up $1.77, or 5.8 percent, for the session. Futures prices haven't topped $32 since mid-June. For the week, the contract is up nearly 7 percent. A gasoline pipeline near Iraq's biggest oil refinery at Baiji in northern Iraq was blown up by saboteurs -- the sixth attack on pipelines in two months, according to news reports."

Waverider: Hmm...just what the so-called economic recovery needs...higher energy prices!

"Let me just put it to you straight. How many times have paper
currencies - unbacked by gold - become worthless?

Answer: every time.

And how many times has a gold currency lost its value?

Never".

Nothong to add - cb2

Sir Goldquest -- Does this not show the poor level of understanding that people have related to the difference between GOLD and a combine melt of copper and zinc ?
ANY TRUE Goldheart could, by only lifting one bar, tell that it was NOT GOLD !
THIS shows how much more education of the sheeple is required before true knowledge has arrived again.
Thanks for that URL.
<;-)

goldquest (08/01/03; 15:28:26MT - usagold.com msg#: 106624)
What A Trick!
http://biz.yahoo.com/rm/030801/iraq_gold_1.html
Turning Gold into copper!
===
Reuters
Gold bars found in Iraq turn out to be mostly copper
---

BTW, I just took the cloth covering off of the Crystal Ball because fireworks were showing through the dark velvet colored cloth ! IT APPEARS that next week will be a STELLAR GOLD market for all to enjoy ! As Sir Ari says, Get your Au before it gets lighter for the same number of US$!
Question -- How many think that the Crystal Ball is correct and that by the end of next week the POG is closer to $370. than $340. ?
<;-)

You have to wonder what those boyz were thinking when they saw those bars. Anyone with a high school chemistry education would know that much gold would collapse the suspension on those trucks. When I first heard the story of one then two then yet another tractor trailor full of "gold bars" was intercepted I thought that it had to either be a mistake or really was copper (or alloy).

It only demonstrates that there is a serious problem in the US public education system when this went unnoticed among so many and for so long. The US is after all dead last in education among industrialized nations. But I digress. This is an old story and the error was realized a couple of weeks later. Real gold bars were found at the "central" bank in Baghdad and another site along with some foreign currency.

BTW, did anyone read the "fake" gold bar post this morning? My play on ords of the old Keynesian statement about gold being a "barbarous relic" (The Barbarous Relic Files). I try to bring some interesting odd and amusing gold news on occasion but don't assume I am playing down gold.

- Black Blade

off to the gym (light workout tonight)

http://www.jsmineset.com/s/Home.asp"In My Opinion Stand Your Ground Because:
1) The Cartel is scared to death that I am right about a pending major up move in gold.
2) Today was pure bluff by floor traders for the cartel.
3) It was ticked down on absolutely NO VOLUMEat all.
4) The weakness has no fundamental substance.
5) The bond market is in more than serious trouble.
6) The bond market has the capacity to take the US dollar to under .92, not helped by higher rates.
7) The US dollar economy is leaderless.
8) The US Treasury is playing Russian Roulette with China.
9) The US dollar rally that was in place seems as if it was getting supplied in each minor push up, a change in market appearance from the week before.

In believe that this is the time you must stare down the opposition and not panic. This is the time to stop selling weakness and buying strength but reverse those failed tactics borne of a lack of understanding. We have worked together for more than 18 months now. If you believe that I know gold then stand firm with me."


I personally blew most of my dry powder today on giveaway prices, Sinclair might be right. The time to take a stand may be upon us!!

Have a golden weekend.

sc

http://www.jsmineset.com/s/Home.asp"No One Has Properly Defined the Massive Nature of What is Affecting the World Bond Markets"

"NEW YORK, July 31 (Reuters) - U.S. swap spreads blew sharply wider on Thursday, suffering one of their worst weeks since the 1998 LTCM crisis as the big rise in benchmark yields had mortgage investors hammering the market with heavy hedging. Five and 10-year spreads widened dramatically, by more than 8 basis points, in what traders described as a market in which it was increasingly difficult to get trades done and where dealers are struggling with the overwhelming needs of the mortgage universe. "This can't go on for much longer because the market can't take this. Someone's going to get into trouble," said one head trader at a U.S. bank. "


BURN, BABY BURN!!!!!!

I smell blood in the water. Where does money go after the bond market? Rotation (in lengthy cycles for market timers):Equities...Bonds.....Hard Assets (AU)..etc. Now I know. I am preparing for the next opportunity far off in the distance (bargain equities). Lookin' good dude...CM

http://biz.yahoo.com/rf/030801/financial_mortgages_1.htmlSnip:
"Nightmares became a reality this week in the massive fixed-income sector as one of the worst bond market plunges in the past decade only got worse. Traders and investors alike fear the trouble isn't over and, come Monday morning, the turmoil could continue. Everyone blames the same culprit: the $4.9 trillion mortgage-backed securities market and the hedging of those bonds, which battered Treasuries, the agency debt of housing giants Fannie Mae and Freddie Mac and the interest rate swaps market.

The pain has been so severe and widespread that analysts are starting to wonder how the big losses have hurt the many commercial and investment banks that have made money holding all these bonds. Top financial stocks, led by J.P. Morgan Chase & Co.(NYSE:JPM - News), Bear Stearns Cos. (NYSE:BSC - News) and Lehman Brothers Holdings Inc.(NYSE:LEH - News), fell sharply over the past two days on worries about these losses.

With the mortgage market now so huge, all kinds of portfolio managers have been forced to unload Treasuries and swaps in a way that has destabilized the broader market. As a result, selling begets more and more selling. "This looks like the 'perfect storm' with everyone rushing for the door at the same time," said Robert Gay, global head of fixed-income research at Commerzbank Securities."

Waverider: I wonder if any of us can really imagine the implications and repercussions of this?

http://www.jsmineset.com/s/Home.aspSilvercollector quoted from today's Sinclair's Gold Market Summary:
5) The bond market is in more than serious trouble.
6) The bond market has the capacity to take the US dollar to under .92, not helped by higher rates.

Sinclair has another article today entitled: "No One Has Properly Defined the Massive Nature of What is Affecting the World Bond Markets"

Sorry Jim, as your own # 6 suggests, it's only the US bond market which is in trouble. Eurobonds are doing fine, thank you.

Here is a post from a reciently retired bond trader.
He was a knowledgeable bond-market trader who'd been at his post for the better part of 30 years, and is on record for having predicted this wipeout. In answer to my query, he sent me an interesting email (realize that this is one man's opinion, and not fact) that I would like to share with readers, in uncut, uncensored form:


He begins:


Dead bodies are hiding behind the Mark to Market. The curve has killed all the wise guys as the two- to 10-year spread went out 70 in the last few weeks. Fannie Mae and Freddie Mac are staggering nightmares, and I think the Fed is buying their paper on the open market. You see what Lehman Brothers did, bought Neuberger to "lower profile in bonds" where they can't make any money. Look at Merrill's earnings 57% from proprietary trading, meaning carry trade! Look at the footings of LEH, Morgan Stanley, J.P. Morgan Chase. They are staggering. They all are on one side of the trade. Institutions can't get out now because Wall Street is not bidding, and what is coming down the road is the most violent bond market you will ever see.
I got out because they did not need smart salesmen. The SEC has changed the rules. There is a new trading system called Market Access. Gives bond prices transparency, and every idea I gave out had to be put in competition. It is over for bonds. Bill Gross has nowhere to sell his bonds because Wall Street is now going to be his enemy. He has to put his stuff on Market Access, and Wall Street is going to front-run it all. I will add more later, but rates are going up a ton. I see 6% 10-year notes by December. There is no money for the Treasury. They have worn out the welcome this time. But dead bodies? Not for a while. The Fed and Treasury will cover it up as long as possible. LTCM is going to look like a hiccup.

The key is liquidity. There is none, which is why I am shocked the dopes at Treasury did not offer $30 billion in 30-year bonds. They have no clue. Bond management is now a race among the mediocre. Indexing and consultants have forced even the smart guys to capitulate and buy stuff that makes them gag. It is going to evolve into a lemming mentality. And the moves are going to be enormous. Look, the long bond contract fell what, 18 points in a month? That is real money. But you still have an economy that is not borrowing, and you can't make people borrow. Going to get wild. If we don't have a depression caused by enormous debt defaults, the other side is gold at $3,000 an ounce."

I have discussed the coming real estate bubble collapse over the last few months (even as long as a year ago). Everyone it seemed was running away from stocks and to perceived safe havens like bonds and real estate. Well here we are with the bond market in turmoil and real estate about to have a blow off of the likes never seen by this generation. We now have Treasury about to unleash a wave of bond auctions to finance the ballooning deficit and where the buyers will come from no one seems to know unless it's the foreign central banks who buy at behest of their governments to keep their currencies competitive. Remember now, Japanese monetary authorities have been buying tens of billions of dollars worth of US debt so far this year and Asian central banks are swimming in an ocean of US denominated bonds. What happens when the value of those bonds crash? Pimco's bond king Bill Gross has been giving a very gloomy assessment on bonds for the last few weeks and he has been quite vocal about it too.

Soon there will be a glut of real estate with few buyers and high interest rates making matters worse. The refi market has been a primary source of cash to fund consumer spending and now with rates rising that market is gone (down over 39% as of last week) and mortgages for new homes falling off (although a few stragglers may make a last ditch effort to lock in low rates before they "miss out"). Buyers have been buying not just primary residences but second and third homes mortgaged to the hilt. If interest rates soar and there are no buyers then what happens? God help those with variable mortgages. I remember Houston when the oil business cratered along with oil. The petroleum industry is a major employer and many businesses there are geared to service the industry. Real estate prices crashed and there were several brand spanking new subdivisions of middle class to executive style homes selling for as low as 20 cents on the dollar in the aftermath. I have seen real estate collapse in Nevada's mining towns as well with many homeowners handing the keys over to the bank. I see this same scenario playing out all over the US. should real estate prices dive as rates soar higher. So do the debtors (homeowners) just give up, hand the keys over to the bank, and walk away or do they hold on and keep paying up on wildly overvalued properties?

No one seems to be talking too much of the recent accounting scandal at Freddie Mac and the huge derivatives positions at Freddie Mac and Fannie Mae either. Why would Freddie Mac be holding back reporting this year's great earnings? Supposedly the reason was to stretch out the profits into coming quarters but then maybe it was to cover something else no one was ready or willing to discuss - like their wildly leveraged derivatives positions should a "blow off" in the bond and real estate markets occur. Certainly something to consider.

- Black Blade

http://www.financialsense.com/Market/wrapup.htm
Snippits:

The financial markets were all over the board this week. U.S. Treasury instruments continued their brutal sell-off, but this week has been different because stocks are now going down right along with U.S. Treasury Bonds. Right when you think that interest rates should stabilize, they keep heading higher as investors continue dumping bonds. This could continue, as the Treasury is going to borrow more money next week than it ever has for a quarterly refunding. It's beginning to look like the Feds needed interest rates to go higher just so they would have enough buyers next week to sell $60 billion in new Treasury debt.

They just came out with second quarter GDP and everyone is waving the banner that the economy is on the mend with GDP growth of 2.4% versus 1.4% last quarter. Remember that last quarter the initial number released was 1.9%, which was later revised to 1.4%. If the second quarter follows suit, it will be revised down to 1.9%. For the last quarter, the biggest part of the 2.4% gain was increased defense spending which accounted for 1.7%. The second largest contributor to growth was consumer spending. The increases in consumer spending came in auto sales due to cheap financing and large rebates, and from cash-out refinancing to purchase just about anything.

At first glance we see unemployment dropping from 6.4% to 6.2%, but overall the economy lost more jobs. We have lost jobs here in the U.S. for six out of the last six months. This is supposed to lead to economic recovery? The reason the unemployment rate fell is because people that were looking for work have given up looking. That means they are no longer part of the statistic. They are no longer considered part of the workforce in America because they are discouraged.



Black Blade: Ditto on everything. Where the "good economic news" is I can't find it. The CNBC spin was amazing today. According to these carnival barkers and infomercial pitchmen the economy is in the midst of a huge economic expansion with wild profits as far as the eye can see and all the individual investor need do is toss in his/her life savings so as to "not miss out". I wonder why the insiders are selling shares at a record pace and running for the exits like the blazes then. Speaking of CNBC, I have been watching lately and I notice that there is a hell of a lot of "public service announcements" in the place of advertisements from paying businesses. I have never seen so much of Ed McMahon pushing "Neighborhood Watch", Partnership for Drug Free America, and Stop Kids From Smoking ads in all my life as I have in the last couple of weeks. Where are the paying customers? Something does not smell right. It's the little observable things like this that I tend to notice and it just does not add up.

Sir BB, your recent post was thought-provoking, and a lot of what you have postulated will occur.

However, IMO there will be a "flight to safety" issue that will shore up the property market. As you know, the Joe Sixpack investment protocols go from (a) leveraged futures, (b) futures, (c) equities, (d) bonds, (e) "bricks-and-mortar" (i.e. property), and finally (f) gold and precious metals.

With the inflation that has yet to be worked out of the system, (a), (b), (c) and (d) above are now dead in the water. Taking into account the considerable amount of funds sloshing around from pillar to post trying to seek a return (or even "safety"), it is reasonable to assume that we have not even seen the start of real property inflation, let alone the end.

Sure, those on the borderline will be deeply affected by an obvious rise in real interest rates (and indeed variable rates), but this will not necessarily mean that ALL property is facing a deflating value. With the anticipated "flight to safety" money flowing INTO the property market, all it will mean is property changing hands from the weak hands (i.e. those who could ill-afford property in the first place) to stronger hands (i.e those with investment funds still available evan after the ravages of the Great Bear).

All that I can foresee in the short-term is that there will be property bargains to be had.

I do not believe that there will be a generalised crash in property values per se. Maybe later in the cycle, but not in the immediate future.

Again, this is just my humble opinion.

Cheers! GS

http://www.zealllc.com/2003/infdef2.htmSnip:
"Today, just like any other day in the past few years, one of the greatest economic debates still swirls around the inflation or deflation question in the States. This old debate continues to rage because the stakes are so high for everyone.

From my perspective, it seems like the "threat of deflation" is brought up most often by Wall Street and the government/Fed establishment. I am starting to suspect that these deflationary references are merely cleverly crafted misdirections though, designed to distract investors from the real inflationary threat. When you watch a magician perform, he always leads your eyes to focus in one place while the real "magic" is happening somewhere else. Alan Greenspan himself is the master of this grand economic sleight of hand designed to mask the true dangers of inflation...

So if you are Greenspan and want to distract investors from the real threat, why not pretend you are fighting the nonexistent "threat of deflation" rather than edging towards all-out dollar hyperinflation? While inflation has been universally recognized as a great evil and an immoral regressive stealth tax for millennia, perhaps inflating can be rendered acceptable if investors are duped into believing that it is "necessary" in order to prevent the bugaboo of deflation. If this deflationary-sleight-of-hand-to-mask-huge-inflation hypothesis is correct, what is the motive? I suspect the motive of Greenspan and the pro-inflation crowd is simple. They want to flood the markets with dollars to try and prematurely end the Great Bear bust in the stock markets, but they don't want the bond markets to recognize the true monetary inflation and collapse. A bond collapse could send long interest rates into the stratosphere, which would slaughter the majority of Americans with adjustable-rate mortgages and single-handedly disembowel the refinancing boom. And if Americans are forced by rising long rates to stop extracting equity from their homes to buy cars and TVs, the US economy is toast and another full-blown Depression, albeit an inflationary one, is probably assured."

Waverider: An excellent (rather lengthy) read tonight from Adam Hamilton - nothing that Black Blade, GAB and others haven't covered today-just a bit more detail.

From Jim Puplava's news hour:

A listener supplied this quip - Ben Bernake's name sounds almost like Ben, burn the currency!

Sometimes phonetics add up to reality - cb2 ;>)

new note from Fleck
"...Regarding the ongoing debacle in the bond market, I had been canvassing my best sources there to try to figure out where the "dead bodies" are (the firms that have been blown up by the move-in rates). Thus far, I'd been unsuccessful in learning anything useful until I was able to track down a friend who just retired. He was a knowledgeable bond-market trader who'd been at his post for the better part of 30 years, and is on record for having predicted this wipeout. In answer to my query, he sent me an interesting email (realize that this is one man's opinion, and not fact) that I would like to share with readers, in uncut, uncensored form, He begins:
...Dead bodies are hiding behind the Mark to Market. The curve has killed all the wise guys as the two- to 10-year spread went out 70 in the last few weeks. Fannie Mae and Freddie Mac are staggering nightmares, and I think the Fed is buying their paper on the open market. You see what Lehman Brothers did, bought Neuberger to "lower profile in bonds" where they can't make any money. Look at Merrill's earnings 57% from proprietary trading, meaning carry trade! Look at the footings of LEH, Morgan Stanley, J.P. Morgan Chase. They are staggering. They all are on one side of the trade. Institutions can't get out now because Wall Street is not bidding, and what is coming down the road is the most violent bond market you will ever see.[p]
I got out because they did not need smart salesmen. The SEC has changed the rules. There is a new trading system called Market Access. Gives bond prices transparency, and every idea I gave out had to be put in competition. It is over for bonds. Bill Gross has nowhere to sell his bonds because Wall Street is now going to be his enemy. He has to put his stuff on Market Access, and Wall Street is going to front-run it all. I will add more later, but rates are going up a ton. I see 6% 10-year notes by December. There is no money for the Treasury. They have worn out the welcome this time. But dead bodies? Not for a while. The Fed and Treasury will cover it up as long as possible. LTCM is going to look like a hiccup.[p]

The key is liquidity. There is none, which is why I am shocked the dopes at Treasury did not offer $30 billion 30-year bonds. They have no clue. Bond management is now a race among the mediocre. Indexing and consultants have forced even the smart guys to capitulate and buy stuff that makes them gag. It is going to evolve into a lemming mentality. And the moves are going to be enormous. Look, the long bond contract fell what, 18 points in a month? That is real money. But you still have an economy that is not borrowing, and you can't make people borrow. Going to get wild. If we don't have a depression caused by enormous debt defaults, the other side is gold at $3,000 an ounce."

http://www.ntrs.com/library/econ_research/weekly/us/images/030801_03.gifugh

http://quotes.ino.com/chart/?s=FOREX_XAUUSDO&v=dmax&w=1&t=l&a=200
Gold is trading in a big triangle going all the way back
to February. It will have to break out some time before
October, I would expect to the up side. As it does, my
impressions suggest that it might top somewhere around 390.

I have seen some who like to trade back and forth between gold and silver depending on the ratio ounce of gold to ounces of silver.It seems intiguing.Has anyone in the forum had good sucess increasing their position this way?The main thing to this form of trading would be the premium you pay, I would imagine you need to pay the premium on just one of the metals if you have to pay on both it may not be profitable.21

http://www.financialsense.com/editorials/bolser/images/0602.h3.jpg
I always enjoy your stats on Fed repurchase agreements. I found this graph (see link) on Fed repurchase agreements from 1995 to today. It shows the dramatic increase in repo's since August 2002.

It is part of an excelent article by Jim Puplava on silver: "The Undervalued Asset Looking for a Catalyst"

The Puplava article is located at:
http://www.financialsense.com/stormwatch/oldupdates/2003/0702.htm

http://www.financialsense.com/stormwatch/images/2003/catalyst/TL_gsratio.gif
I think your right. The premiums would make this form of trading very difficult if you are talking about physical posession of the metals. I don't know enough about the futures markets to know if this would be an effective method of trading back and forth between the metals. Maybe someone else could comment on that. I think the fundamentals for both metals is excelent. So just buy both and hold on. When the rocket starts up, you will be lucky to find either metal at any price, much less trying to trade back and forth between them. I have included a link to a graph of the gold/silver ratio over the past 120 years. It shows silver to be the more undervalued metal of the two.

Dollar Bill (8/2/03; 06:08:13MT - usagold.com msg#: 106644)
!_!
new note from Fleck
===
Perhaps "Fleck" is posting on the USAGOLD Forum under the handle of --
+++
Cytek (08/01/03; 22:06:51MT - usagold.com msg#: 106638)
BONDS
Here is a post from a reciently retired bond trader.
He was a knowledgeable bond-market trader who'd been at his post for the better part of 30 years, and is on record for having predicted this wipeout. In answer to my query, he sent me an interesting email (realize that this is one man's opinion, and not fact) that I would like to share with readers, in uncut, uncensored form:
===
What do you think ?
<;-)

Hello all!

I am quite sure that the bond salesman quoted by Fleckenstein is saying some very, very interesting and pertinent things about the bond debacle, things which we should all understand as clearly as possible. Indeed, I am extremely interested and want to understand what that bond saleman is saying.

However, the bond salesman is speaking a language which is completely familiar to other bond salesmen and other sophisticated investors, but this language is incomprehensible to an Albino Bat like myself. This bat understands the permanent and unchanging attraction of pure gold, which is such an easy thing to understand.

But Fleck's bond salesman talks about things I cannot understand. If only the specialists would speak to us all in terms which we can all understand - but, they use a "shorthand" in the trade, and their important knowledge is not passed on to us outsiders.

If anyone will translate the bond salesman's message into plain, straightforward English he will be doing us all a service.

Thanks. The GAB.

You shall see how IGNORANT the GAB is. (Ignorant of all the foolishness that is the financial world today, that is. Not of the important things in life - like GOLD.):

Decipher the code, please!!!

"Dead bodies are hiding behind the Mark to Market" Just what does that mean? I can understand that some losses are being hidden, but - what is "behind the mark to market"?

"The curve has killed all the wise guys as the two- to 10-year spread went out 70 in the last few weeks." Something bad happened to some people; tell us about the "spread" and why "going out to 70" killed these people. Just what is the "70" and why did it kill them?

"You see what Lehman Brothers did, bought Neuberger to "lower profile in bonds" where they can't make any money"
Why did buying Neuberger lower the profile of Lehman in bonds? What IS A LOW PROFILE in bonds, anyway? Why is it desireable? Why can't Lehman make any money. Was it a good thing or a bad thing to buy Neuberger, and why?

"Look at Merrill's earnings 57% from proprietary trading, meaning carry trade!" I'm looking, but why is carry trade so bad, please explain what it is, and why is it so bad at present; why is 57% of earnings from that so bad?(apparently)?

"Look at the footings of LEH, Morgan Stanley, J.P. Morgan Chase. They are staggering. They are all on one side of the trade. Institutions can't get out now because Wall Street is not bidding, and what is coming down the road is the most violent bond market you will ever see."

Please explain what "footings" are!! Why are they "staggering"? What do you mean by "all on one side of the trade" and why is that bad? I can understand "Wall Street is not bidding", in other words, no one wants to buy. Please explain what you mean by a "VIOLENT bond market"?

I won't tire the readers, but this goes on and on. Sure, the guy sounds as if he knows what he is talking about, but he is certainly not talking to me, at any rate.

This old GAB.

I do not know how to speak Bondtradingish, but I can guess enought to translate into English. Any native speakers are welcome to improve my translation

BT: ...Dead bodies are hiding behind the Mark to Market.
English: there are huge losses not being priced yet (i.e. when they inventory their bonds at the going rate, there will be many bankrupcies).

BT: The curve has killed all the wise guys as the two- to 10-year spread went out 70 in the last few weeks.

English: the difference between 2 yr and 10yr treasuries has expanded by .70% this last week. This has caused big problems for the traders who thought they were clever.

BT: Fannie Mae and Freddie Mac are staggering nightmares, and I think the Fed is buying their paper on the open market.

English: The GSE have vast loses, and the Fed is buying their loser bonds to try to keep them afloat

BT: You see what Lehman Brothers did, bought Neuberger to "lower profile in bonds" where they can't make any money.

English: need to know more about this transaction, the context suggests that Lehman Brothers are not getting the results they hoped for

BT: Look at Merrill's earnings 57% from proprietary trading, meaning carry trade!

English: Merrill is making 57% of their money from private trading, not from doing what they are supposed to be doing. This may suggest large losses in the near future.

BT: Look at the footings of LEH, Morgan Stanley, J.P. Morgan Chase. They are staggering. They all are on one side of the trade. Institutions can't get out now because Wall Street is not bidding, and what is coming down the road is the most violent bond market you will ever see.

English: These houses have vast holdings of just the types of bonds that are losing value. These may have been bought with borrowed money. Even greater losses are coming [the word "violent" may refer to the process by which forced selling lowers prices which in turn causes more selling. I believe stock traders call this a "waterfall decline".

At last I did something I promised myself I would do closed a position out with a profit when there could have been more profit down the road or not.Someone once said you can never go wrong taking a profit. This position was in the energy funds,this area along with gold and silver are the areas I believe in.The reaction of the energy funds over the last month I do not understand.Nothing has changed fundementally in these markets the problems BB talks about are still out there'some energy funds have lost 30% of there ytd gains.So I am out for now maybe buy back in down the road or by some gold and or silver.21

I know the problems with freddie and fannie but does anyone have thoughts on Ginnie Mae.I put my mothers money in this several years ago because she needed a decent return plus saftey and access to her money through check writing privleges.I could not talk her into PMs but she does have some junk silver.From what I understand the Federal Govt. does guarenty the principle of ginnie mae funds.These funds have preformed well over the last several years but have taken a hit lately.This is not my money its my mothers and she is retired so thats why I am worried for her she would panic when it lost a nickle a share imagine her watching golds fluctuations.She needs a decent interest rate and access to this money as sometimes she uses it for living expenses.If PMs do what we think she wont have to worry I will take care of her but till then we all know the struggles to keep the wolf from the door.21

Sir Gandalf the White, I think you misspelled --recently--.

http://www.vheadline.com/readnews.asp?id=9511Interesting 5 part series for weekend reading..

Trying to spin the news, the FT takes part in a concerted (?) effort by big boys to keep the bond issue looking good.
The FT times is not known for such spin.

Financial Times Today;
Bond yields rise as recovery hopes strengthen
By our financial reporters
Published: August 1 2003 20:18 | Last Updated: August 1 2003 23:59
The yield on US Treasury bonds climbed at its fastest pace in more than two decades over July, reflecting mounting confidence that the US economy is finally poised for a period of strong growth.
On Friday, the yield on the 10-year note hit a one-year high of 4.57 per cent, a rise of close to one percentage point in a month. Despite slipping slightly by yesterday's close, the yield rose 24 basis points this week alone.

Hopes that the US may be emerging from its prolonged period of sluggish growth were fuelled on Friday by positive news from the embattled US manufacturing sector. The ISM factory activity index, based on a survey of manufacturing executives, showed an expansion in the sector for the first time in five months, rising to 51.8 in July from 49.8.
..Earlier in the week data showed the economy expanding at an annualised 2.4 per cent in the second quarter - the fastest growth since the third quarter of 2002. "The fear of deflation has been melting away," said Marc Chandler, chief currency strategist at HSBC in New York. "The market is now bracing itself for a recovery in the global economy, led by the US."
..The bursting of the bond market bubble has been matched by the strongest weekly rise in the dollar for two years. The dollar climbed 2.5 per cent against the euro, ending the week at $1.1268. Since its low for the year in mid-June, the dollar has rebounded by 6 per cent against the euro.
..The mood of optimism over the US was dented only slightly on Friday by weak employment figures. The Labor Department said payrolls..

Something has been bugging me recently, and I would appreciate either some education or a confirmation that I'm thinking straight. (I'll say now that the exact numbers and dates I quote may be a little off - I'm an engineer by profession (but not a PE, Gandalf !) so I'm not good at memorizing numbers - I see too many to keep all of them in my head)

As the (US) GDP represents the sum total of all goods and services in the US, inflation must be taken into account for these figures to be meaningful. Constant economic activity (0% growth) would yield a greater number in dollar terms. So what figure is used for inflation ? The CPI is oft quoted, but, as the name implies, it is only an indication of the inflation of CONSUMER prices. Are there other, composite figures ?

There was an announcement this week of a GDP growth figure of 2.4%, annualized. If this assumes a (say) 3% inflation rate, then the raw figure year-on-year is 5.4%. However, as we all know here, the announced inflation figures are so massaged that they are, to say the least, a little suspect. So suppose the REAL inflation is not the comfortable 3% but more like 6%. If the raw GDP increase is 5.4%, then the real economy hasn't grown by 2.4%, but actually shrunk by 0.6%. And as 1% of this was directly attributable to war spending, then the 'civilian' growth is even further in the negative. But I have never seen any challenge to the validity of the GDP figure, which I would have thought would have been almost a given, in view of the use of hedonics, etc.

Am I missing something here ?

TIA,
C!

Dave Lewis has some on-topic views."Included, but secondary to this list of conceptions which obscure rather than clarify, I place the notions of hedonic deflators and national consumption vs. national income or production accounting".

http://www.chaos-onomics.com/link

http://www.chaos-onomics.com/plant.htm From the same site Ten Bears just listed...

"As I talked about in my July 24th piece, gold has been carving out a huge triangle formation. Triangles almost always contain a lot of market energy. They bring both bull and bear camps into trading proximity that leaves only enough room for one winner. With gold trading for the most part off the dollar, and with the dollar trading stronger on better than expected US economic numbers, we could see a buying opportunity as early as today. If Payrolls and ISM come in better than expected, it is quite possible we could get an intraday spike higher in the dollar which drops gold under $350. That would be a great buying opportunity. I'll discuss actual levels in the model portfolio section below."

Happy weekend !
Rich

http://www.chaos-onomics.com/plant.htmFrom the Chaos site just mentioned, written July 30th. Not sure what Chaos economics is but I suspect it's not well ordered as structured finance would like.

"After a day like yesterday, how can I not say something about bonds. What an amazing display of bad-position dominated trading. I'm not sure what these mortgage guys have gotten themselves into, but they have taken a must-sell attitude toward this market. I started making calls when bonds crossed back over into negative territory from being up a point on the poor Consumer Confidence numbers. Without reservation everyone I spoke to blamed the selling on mortgage related accounts. here is REAL pain and REAL distress out there! When I commented yesterday that the move was still measured and calm, that was before yesterday. I want to upgrade my forecast to include periods of panic. One person I spoke to said the hedge funds keep pressing the bet too, as mortgage traders have to sell regardless of price. Another source said they spoke to their senior bond trader who said, "there are stops at every tick and no bids".

"Upgraded to Panic"

Sir Gandalf the White,
I think this line..."Here is a post from a reciently retired bond trader." tells me it is not Sir Fleck.
That line is all Sir Cytex. And good for him for spotting it. I should have reviewed the forum before posting. I normally do.
This was from The street.com real money. They are having a free month offer now.

Nolan commenting on the tremors.
..Is it feasible that the financial sector, after almost doubling in size over five years, has today the capacity to expand sufficiently to sustain the financial and economic Bubbles, while playing buyer of last resort to the de-leveraging speculator community? It is not readily apparent to me that this can occur.
..All facets of the Credit system have been firing on all cylinders, with resulting massive Credit growth barely sustaining the Bubbles. The banking system, the GSEs, the Wall Street firms, the REITS and the hedge funds have all ballooned over the past few years. Who, then, today has the capacity to take risk from the scores of speculators looking and needing to offload? Well, the explosion of the interest rate derivative market has never made much sense. Somehow the GSE and mortgage securities are apparently able to balloon forever, with players enjoying the capability to easily and inexpensively hedge interest rate risk. But to whom? Who is going to take the other side of the interest rate trade - a "trade" that is ballooning in size and must continue to balloon to ward off a serious risk of Credit collapse? That is the question. One thing appears clear today, the Fed has lost control of the interest rate market, with ominous portents for the highly leveraged and speculation-rife U.S. Credit system.

excuse the multiple posts today.
"..An associate of mine (who is not normally prone toward conspiracy theories) blames the whole thing on the Fed. His claim is that the Fed screwed over the hedge fund community and left them "high and dry" with big bond positions which, they had encouraged fund managers to put on. According to him, the highlight of this effort by the Fed was a conference hosted by Citibank where numerous buy and sell side (mostly hedge funds and their sell side counter-parties) were invited to attend seminars and mingle with Fed officials to discuss economics and monetary policy. Fed officials repeatedly reminded attendees of the current state of economic weakness and the risks of deflation. It was supposedly at this conference that Greenspan spoke with Washington Post reporter Tom Berry which resulted in the "50 BP cut based on deflation risk" article. There were other twists to my associates� claim but the gist was that, when yields began to rise, the Fed fell down in its efforts to throw continued support behind the over-invested bond speculators. That brings us to full circle to where we are presently. OK� so all of this is very possible and perhaps likely, especially given the propensity of the Fed over the last few months to talk rates lower. I heard one commentator refer to it as Fed Open Mouth Policy. My point would be however, that anyone who trades based on what the "authorities tell you to do" deserves what they get. I'm sorry George, but anyone who has tried to piggyback currency market intervention has learned this one the hard way. The bottom line is that the monetary authorities have far less control over the markets than they like to believe. Regardless, the net effect, which we are seeing the result of, is a large group of participants who felt that being long Treasuries was a no-brain winner. That group is in process of exiting the trade."
S.Plant

<;-)

http://www.morganstanley.com/GEFdata/digests/latest-digest.htmlGlobal: Warning Shot
Stephen Roach (New York)
It's a nightmare scenario, even for me. Sharply rising real long-term interest rates are the last thing an economy on the brink of deflation needs. Such an outcome would depress an already weakened state of aggregate demand, conjuring up notions of the dreaded deflationary spiral. The extraordinary correction in the bond market over the past seven weeks tells us not to dismiss such a possibility out of hand.
..That risk hints at the toughest outcome of all -- the potentially lethal combination of low and falling inflation in conjunction with a back-up in nominal interest rates. Needless to say, should America's current-account adjustment begin in earnest as the US continues to slide down the slippery slope toward deflation, the real interest rate outlook could be exceedingly treacherous. And that would be terrible news for a nascent recovery in the US economy -- raising the risk of a relapse in the interest-rate segments of aggregate demand that could lead to an intensification of disinflation and an even sharper back-up in real rates. It would be the ultimate vicious circle for US economy that is already close to the brink of deflation.
...In my view, the recent sharp back-up in long-term nominal interest is a warning shot that should not be ignored.

By the way, according to Moody's Investor's Service, California is not close to having the highest per capita debt burden among the states. In fact, it ranks number 19.
...Edward Yardeni, chief investment strategist at the Prudential Equity Group, " As mortgage rates declined, prepayments increased, reducing the duration of mortgage backs. Mortgage portfolio managers with certain duration requirements then had to go out and buy Treasury bonds, which pushed rates lower. They were the most aggressive buyers in May and June. In many ways what happened is similar to what happened in the fall of 1987, when the purchase of portfolio insurance exacerbated the slide in stock prices...
..The announcement from the Treasury that they would need to raise $450 billion..the bond market realized they were going to get stuffed with a lot more bonds for the sake of reviving the economy, and more parochially, for the sake of re-electing the president. That started to push interest rates up, and all that derivatives-related activity suddenly went into reverse.
..The Federal Reserve also played a role. Alan Greenspan testified in Congress last month that some research showed that alternative methods of conducting monetary policy, like buying 10-year Treasuries to bring rates down, wasn't a good idea. That didn't help...
--I would guess gold's day has moved closer--
Dont fergit, once in a while, church.

http://www.contraryinvestor.com/mo.htmThe best link. Dont miss the lower half of the report.

"...We expect the behavior of financial market participants ahead to change given our most recent experience. Too much money has been lost over the past six weeks for this episode of volatility to be forgiven in pricing anytime soon. And that tells us one thing and one thing only - the price of credit is going up. Because what's different this time is that the Fed no longer has any magic bullets. In fact gunning for Greenspan and friends on the streets of Dodge will be the return of the bond vigilantes. Vigilantes who stopped using bullets long ago in deference to something much more deadly to the domestic and global economies and financial markets - basis points."
--End of my wanderings for the day.

http://www.gold-eagle.com/editorials_03/arnoldr022203.html
Critical

When the FED lowers rates, prints money and removes treasuries from the market place two fundamental things occur.

First, and what every pundit focuses on is that the borrowing costs are lowered across the board. This leads to a marginal shift in optimism that this time it will work. Stocks typically take a technical jump up, bonds typically fall, and long term rates rise. This is all a technical reaction to stimulus and indicative of nothing more than a technical reaction. It is not indicative of any fundamental belief that economic stimulus will drive economic activity and be the cause of a new bull market in equities.

Second, and MOST IMPORTANTLY, it is indicative of a flight to safety by the FED itself. When the FED prints money and uses that money to buy treasuries away from the market it is actually parking its own assets in the only "risk" free paper asset available in the world. By so doing they are moving to protect their asset base at the expense of other investors. As rates are dragged down in the process other investors must find alternatives to treasuries in which to invest for a desired return. In other words the FED is transferring risk to the market place and away from themselves.

To date however this balance has been that the FED's primary function has been to stimulate the economy with protection of their own asset base being secondary.

As we move toward zero real rates however I believe this function will shift to protection of their own asset base versus that of stimulus. As a result they will increase their buying of US treasuries and will drive the yields down to the levels I wrote about above.

Everything pivots on economic activity.

The FED, reserve bankers and member banks are willing to incur a reduction in the value of their own asset base caused by the inflation they induce only if it causes an increase in economic activity. In the event that monetary stimulus fails to cause an increase in economic activity, the FED, reserve bankers and member banks will have NO ALTERNATIVE than to move to protect their own asset base ahead of the recessionary, deflationary effects of falling economic activity.

Once the FED and associated members make the decision that protection of their asset base is paramount to stimulus measures the yield on the 10 year treasury will begin to fall rapidly.

As this occurs those not understanding this will assume the FED is still attempting to stimulate and make the tragic mistake of attempting to buy stocks and bonds expecting a rebound.

What is actually happening is that the FED is capitulating to an economic crash themselves and moving to protect themselves at the expense of everyone else.

Also, please be mindful of the fact that the FED will NEVER tell us that this is what they are doing.

Please note that the article appeared way back in February 2003. Also please note that the primary reason for the Fed's acquisition of Treasury securities always has been the necessity of offsetting the drain of reserves caused by the constant increase in Currency in Circulation -- an increase that is initiated by decisions of the public. Compared with total Treasury securities outstanding the Fed's holdings are small, and its acquisitions are dwarfed by the amounts acquired by other buyers, domestic and foreign.

http://www.mises.org/fullstory.asp?control=1181Stagflation.

You remember the 1970's don't you ?

http://www.cftc.gov/dea/futures/deacmxsf.htm The following is COT analysis type speculation. I mention this so those not interested can skip on by.

The open interest jumped in both metals. Either the previously involved game players have increased their positions or more players have been attracted to the game. Or, of course, it may be some combination of both, or, it is possible that the number of players has declined but those remaining have greatly increasing their involvement. Isn't this fun? Does this really tell us anything? I believe so but only in the form of a "supposin" which is an interpretation derived or devined from one's own interpretation of the numbers. This involves probabilities. I'm "supposin" that there are some new investors and I'm also supposin that it may be that these new momentum players have entered on the long side and will bail out if the prices fall. They may have withdrawn (partially at least) from gold last Friday. If they withdraw from silver, their leaving may force the POS under five dollars again which may, of course, trigger sell orders. This in no way rules out the other side of the coin (a higher POS) but with the so-called non-commercials holding such a lopsided number of longs in relation to shorts, well.... Then again, there may be more reluctance to sell now, if the path of least resistence is still up.

For those who like to dream of short squeezes, with the increased open interest, there are now 108,811 contracts totaling (if my math is right) 544,055,000 ounces of silver. The Comex usually holds a little over 100,000,000 ounces of which usually about half are in the registered category meaning ready to be sold into delivery. This number fluxuates but there is never enough to satisfy even a small amount of the current contracts if they were to ask for delivery. Basically, they won't. It's a paper game. However, they can and that would, imho, noticeably raise the price of silver, no? The Comex has protected itself with monthly "limits" on the amount of delivery it has to accomodate. This is, of course, securely hidden in the fine print. I have no idea how they determine who would get physical silver and who would get a raincheck if such a squeeze ever takes place.

I've heard nothing of a fundamental nature other than rumors. I'm of the opinion that the POS will NOT move sideways at this 505-515 level for very long. She needs to make new highs or fall back under $5.00, hopefully then holding above that old 480 or so breakout level. My opinions are often useful contrary indicators. I will say that this is just one poor boy's opinion and it should be valued in accordance with what you paid to receive it. It is offered for educational purposes only in the hopes that it may spark some responding facts, opinions, or "supposins" on an otherwise quiet Sunday.
Thoughts ??
Rich

http://www.chaos-onomics.com/plant_phil.htm"Always assume that the information the average person receives is old and has already been acted upon by investors "in-the-know".

"In a perfect world a guy named Vinny from Brooklyn, along with his pals at the NY Merc does not determine the price of crude oil on world markets. In the real world� he does"

Good read from Plant.

Can you imagine having earned $300 million dollars and now being broke? Do you suppose, while those he thought were his friends were taking his money, that he just never bought any gold or silver? Or, is he hiding his stash from the bankruptcy court procedings?
I've often thought of the productive work done every day on this earth; who does the doing and who gets the payment. This is one reason why I'm self-employed. Even if we can manage to collect for ourselves the fruits of our own labor, there are countless among us constantly trying to separate us from it. Many of them view their thievery as honest work and will steal without remorse. Our own government with its ever depreciating fiat paper is the leading contender.
BN BC Buy often
Rich

Thinkest thou Sir "gets in trouble a lot" was/is smart enough to buy AU/AG? Ever seen the movie "Dumb and Dumber? Back to the tractor....CM

http://www.zealllc.com/2003/infdef2.htmThis link (first brought by Lady Waverider) ties together two topics of particular economic interest for me. I mentioned last week that there was a sudden increase in the difference between the highest and lowest earners in the US in the early '70s. Hamilton states :-

"It is absolutely fascinating that almost a century of CPI data only really has two significant slope changes, one in the early 1930s and one in the early 1970s. Dotted white lines mark these important changes in the rate of inflation. Not surprisingly, these incredibly important events were the direct results of the two greatest fundamental changes in the US monetary system of last century. Since inflation or deflation is the direct product of the relationship of money supplies to the underlying real economy, fundamental monetary changes dramatically impact general price levels."

I would say that it is not just price levels ! In other words, the higher the inflation, the greater the disparity of earnings between rich and poor. Now I am not of the persuasion that says that wealth should be shared across the whole population, but it seems that the way to have a level playing field between rich and poor is to have no inflation. And the best way to do that is to use real money ....

PS. An interesting essay, but I feel he would have more credibility if he restrained his emotive use of such terms as 'socialist dictator' to describe both FDR and LBJ. At least he maintains a little political balance by trashing Nixon as well !

a hole under the fence! He wants out in the worst way!

http://www.hinduonnet.com/bline/stories/2003080400420700.htmSecond paragraph in story linked above says Funds were major buyers last week. Thought you might like to see this one. Best to you, hope your weekend was a relaxing one.

http://finance.yahoo.com/m2?uGold/Silver UP
Japan Stocks DOWN

Just might be some real fun this coming week!

Cavan Man: No, actually, I don't. But others are.

Operative: Thanks

Gold and silver are starting out the week on a positive note.
Rich

No basis for believing his credibiity is damaged by the terms he uses.

http://www.newseum.org/todaysfrontpages/default.asp?page=2Nifty web site. View the world's newspaper headlines at a glance. Best viewed if you have a high speed net connection. One day, when gold takes it's rightfull place, I want to print out the pages with all those GOLD headlines. YES!!!

I just had a look at spot, up 3 bucks plus.

It gets more and more obvious than the trading in NY is rigged.

Have a look, makes Friday afternoon a puke-a-thon.

http://www.csmonitor.com/2003/0804/p13s01-wmcn.htmlArticle just goes to show you can't keep an American Shopper down. They are still shopping, but traffic is picking up at the Dollar Store. Can't afford Target or even Wal-Mart? No problem, you can trade dem dollars for stuff at the local Dollar Store. Perhaps this is the economic rebound Fall St predicts for the last half. LOL

Woolworth's, Newberry's. They used to be called "dime" stores. I can even remember going to the "5 and 10".

That's progress.

http://www.prudentbear.com/internationalperspective.aspMarshall Auerback
"...Many of the leveraged speculators herded into the bond market by Fed intimations of a "Bernanke bailout", are now sitting on big losses. Once burned, twice shy. Higher bond yields going forward will frustrate Fed efforts to herd investors into the stock market by making yields paltry all along the curve. Market participants now suspect that bond prices were way above levels consistent with the prevailing short run equilibrium and were buyers of bonds only because of Fed intimations of a bailout. The bailout was apparently removed two weeks ago: now it appears to be back on the table again. The Fed is still backed into a corner by multiple bubbles of its own creation. Its mixed messages evince a combination of cynicism and desperation that is beginning to be picked up by the bond market. If the stock market buckles later this year, we shall see truly see whether the Fed has repudiated the unconventional once and for all."

beyond me--
"..And because the dollar is the reserve currency of the world, the dollar is likely to experience hyper-inflation elsewhere outside of the U.S. This will be quite interesting phenomena that the U.S. will experience GREAT DEFLATION while the dollar experiences hyper inflation elsewhere outside of the U.S."

http://www.jsmineset.com/s/home.asp"This problem is so big, so immediate, and so systemic that it could explode as soon as Monday morning. Gold is going over $400 and I pray not over $529 without eating up some time. Read on carfully, because all the Gold you own can cannot protect you fully from what is coming directly at us. It is like an unstoppable financial global killing astroid."

http://biz.yahoo.com/rc/030804/minerals_australia_newmont_1.html
Snippit:

KALGOORLIE, Australia, Aug 4 (Reuters) - Newmont Mining Corp, the world's largest gold miner, said on Monday it expects gold prices to rise by $100 to reach $450 an ounce over the next 12 months due to a depreciation in the U.S. dollar. "Our view is that gold will go up to $450 in the next 12 months," Newmont President Pierre Lassonde told a briefing at a mining conference in Australia. Lassonde, who last year accurately predicted a gold price rise to around $350 an ounce, said he expected a further depreciation in the U.S. dollar as financial markets became concerned at the ballooning U.S. trade deficit.

Black Blade: Several miners find themselves in a bind too. As prices are hedged in US dollars and foreign operations are priced in domestic currencies, the weaker dollar is actually a negative for them. As exploration has been on a severe decline the higher price will serious impact foreign operations with declining higher cost reserves after having gutted the heart out of their mines when the POG was much lower. The best course of action is to buy the metal itself.

http://biz.yahoo.com/rm/030804/minerals_placer_hedges_2.htmlAs an apropos to BB's Newmont sees gold at 450$ over the next 12 moonths, Placer Dome is further reducing its Hedgebook.

While the main case for gold remains the deteriorating status of the US $ as the globe's reserve currency. No big wonder, considering the ballooning twin deficits, the bond and especially the agency debt situation as this weeks upcoming 60bn. $ TSY auction will be a real test to the resilience of the bond market and acceptance of more debt paper.

The ongoing trimming of hedge books by producers will also help to put a floor in the POG.

cb2

I stay away from Sinclair usually, but has he nailed the core issue here? And if anyone can elaborate, that would be helpful.
...The reason for this is the apparent counter-intuitive action between the central bank and mortgage related interest rates. It suggests that Mortgage Backed Securities (MBS), which are aggregated mortgages offset by over-the-counter derivatives, do not conform to the natural risk model envisioned when they were created.
...The bond market is saying that the artificial corollary between US Treasury instruments and Mortgage Backed Securities (MBS) has been forever broken, and to the shock of the collegiate derivative traders, all risks are not created equal.
...Given the new immense scope and size of the mortgage market, participants (now also auto makers) will be unable to absorb the dollar cost in the difference in risk between US Treasuries and MBS. They are now a universal derivative money cost, and therefore a risk mismatch. This is the nuclear material the madness of the derivative crowd has produced that is about to shake the entire mountain of derivative paper. It now totals USD$140 Trillions notional value - replacement cost

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1059478674114&p=1012571727088The Financial Times stops the spin and uses the word -chaos-
..Chaos in the bond market, triggered by a steep rise in government bond yields, has worsened troubles at Freddie Mac and Fannie Mae, the US mortgage financiers.
..Their funding costs have increased sharply in the past week as the value of their debt deteriorated due to an extraordinary rout in the mortgage securities markets
Bond yields have risen at their fastest for more than 20 years over the past month, last week touching one-year highs. The rise has been exacerbated by mortgage-related hedging.
..When mortgage rates rise, fewer homeowners refinance their mortgages, lengthening the period over which investors can expect to receive income. To compensate for this extra income, mortgage investors sell Treasury securities or interest rate derivatives known as "swaps". Swap spreads last week widened 30 basis points, coming close to levels last seen when hedge fund Long Term Capital Management collapsed in 1998.

The one reason I can think of, as to why gold and/or silver can never be recognized as legal tender, especially in the Democratic countries of the world, is that it makes Governments accountable!

The ability to print their way out of trouble is their way of tackling the big financial and economical problems.

Until the world adopts a world currency, and/or a world government, gold will continue to be dismissed by governments as inconsequential. The only other way is for anarchy to reign.

Can someone help me understand why my thinking is wrong?

http://www.usagold.com/gold/coins/bullion.html

It seems to me that your thinking is perfectly correct concerning the accountability ! However, as for your statement :-

"Until the world adopts a world currency, and/or a world government, gold will continue to be dismissed by governments as inconsequential. The only other way is for anarchy to reign."

we already effectively have a world government, largely composed of the big corporations using national governments for their muscle, all helped by the IMF, WTO and World Bank. So the problem becomes how to get these guys out of everybody's pockets ? The Malaysian dinar is an attempt in exactly this direction.

The 'revolution' isn't going to come from either the US or Europe (and it is difficult to know what the real agenda of both Japan and China is) as the PTB are living very nicely off the status quo. It will come from those 2nd-world countries that have been screwed over by the likes of that well-known philanthropist Soros but are sufficiently sophisticated to be able, either by legal or religious means, to avoid the pitfalls of bribery and cronyism.

One big help may be the crash of the dollar system, but I have a feeling that the cure in this case would probably entail as much pain as staying with what we have. It's just that the pain would be directed in the other direction - at the developed countries.

The gold share indices have not as of late confirmed the BS spewwed out by the Comex sharks. The last time this has happened physical gold had a 20% plus run.

Time is getting short to load up on the physical stuff cheaply!
Or as Ari would say heavily, as the weight of the real value will give you some extra "burden" to carry happily along the trail ... cb2

"the paper Goldmarket will fail"--FOA

I always wondered how we can find out.Its either when it can't deliver physical at its dictated prices or,possibly:

When it can't absorb the huge money from a failing bond market, money searching for a new save haven alternative,promising at least return of inflation.

Can't absorb in the sense of a) too much manipulation to protect Goldshorts b)inherent weakness in the paperpricing mechanism described here c)see above (can't deliver the physical).

That would be there now!

How could a large treasury auction be successful if, say, a couple very large foreign purchasers threatened not to show up? Like maybe China and anyone else whom we may not have stellar relationships (long list).

Well, you might come up with a plan to stur up a lot of domestic and freindly demand. But 3.25% or so just isn't quite enough of an incentive. So let's announce that we might be ready to use unconventional measures to support the long end of the market. You might also know that this information is going to leak - so while the hedge funds and institutions are stampeding to buy, the money center banks and all the wall street boys are selling short.

Next you might just come out and announce that you really don't think you'll have to use these measures, and boom, you get a preverbial whipsaw for the not quite so bright or informed money (the FED and Greenspan just hot, speculative money that messes up the works). So now we have rates approaching 4.5% on the 10 year, and if my senario is correct, they'll have a nice gain on their purchases this week as the shorts cover and the FED puts a floor inder the market (like maybe doing a little buying on the long end if needed - they did not say they wouldn't do it, did they?)

We'll see over the next couple weeks, but I'm expecting a pretty good auction this week due to the above (?) and the SM is due for a correction (big one?) and if they can get the bonds back on the upswing (no choice in my opinion) some hot technical money should leave the SM. AND THE INSIDERS WILL DISTRIBUTE ALL THE BONDS THEY BUY THIS WEEK TO THE NOT SO WELL INFORMED MONEY, and the cycle repeats itself.

Gold & Silver? With this kind of jawboning, and with the bond market acting like a thinly traded tech stock. . . end game approaching rather quickly IMHO, so just keep buying the shiney stuff, yellow or white. . .

Pizz

I don't believe your thinking is necessarily incorrect. Gold does more than make governments accountable though, it makes it impossible for people in government to commit certain types of immoral, or harmful, fiduciary actions. I don't agree however, that lack of government necessitates anarchy. Good government comes about when people get together to achieve a common good, or accomplish a necessary objective. Any government that goes beyond that has no purpose useful to the people, so is harmful to them. But the valid and beneficial ideas behind any government must come from some person or persons. And because of this it may correctly be assumed that there are people who would conduct themselves in a way beneficial to themselves -and not harmful to others- even without government. What we need is not more government, or stronger government, but more of these particular types of wise individuals.

In MKs book ABC of gold my favorite story was the one about the family that fled South Vietnam before its fall,they were able to sneak their 20 ounces or so out with them and they were able to sell it and start a new life in the U.S..This story has a lesson for all to learn from.In my own life I have seen panic conditions.I was visiting my brother in NY during september of 2001,I was there to give CCNY my packet to apply for their grad school program I was a quarter mile from WTC when it fell and have a roll of film to prove it.I will tell you now credit cards were no good the buildings falling nocked out satellite communications,cell phones and credit cards did not work.That day cash was king its the only way you could buy anything on manhatten that day.If you are travelling always have enough cash on you to get you home in case of emergency.You can view gold this way in larger context when cash is unusable in a long term emergency your gold will allow you to survive.I look around today something that strikes me is the proliferation of tatoo parlors,people who in the past would never have gotten tatooed now get them on a regular basis,buisnessmen housewives everybody.Some may think I am out in left field on this but this may be a way that accustoms the population to body markings so govt can tatoo an ID on us one day.You wont be able to buy or sell without the mark those are not my words but we all know were there from.Gold truly does give you the ability to move and live in animinity.I was listening to mainstream media talking about the patriot act and even they said it allows the goverment to hold U.S. citizens it suspects of terrorism,they can hold you for as long as they want,they do not need to allow you to see a lawyer,they can hold and not allow you to contact your family,and they can try you in a military court.Common law that this country was founded upon is dead your birthright is being usurped.Will those who hold gold or visit certain internet sites or read certain books be considered terrorist one day.Its turning into 1984 before our eyes.21

http://www.theglobeandmail.com/servlet/story/RTGAM.20030804.wxryuan0804/BNStory/Business/Snip:
"As it struggles for a strategic response to the sudden eruption of complaints about its currency, China is slowly coming to grips with its new role as an economic powerhouse on the world stage. The wave of foreign criticism and political pressure is unprecedented in China's economic history. For the first time, it has gained such a powerful position on world markets that it is blamed for millions of job losses in the United States, Canada, Europe and Asia.

Beijing's public reaction has been unsympathetic. In the official media, Chinese policy makers and opinion leaders are scoffing at the Western complaints, seeing them as an admission of economic illness. "If they are sick, why let China take the pills?" asked Xiao Guoliang, an economist at Beijing University. He accused Western leaders of "retaining a Cold War mentality." One Chinese newspaper approvingly quoted a Western economist who said that China was becoming the favourite villain of countries with "weakened economies." Others cited the government researcher Xu Hongyuan, who warned that a revalued yuan would not be a "magic cure" for slumping economies. "China should not be made a scapegoat," he said."

http://quote.bloomberg.com/apps/news?pid=10000086&sid=aiZh.Rlwtkko&refer=latin_americaSouthern Exposure.

(excerpts)

Aug. 4 (Bloomberg) -- Brazil's benchmark bond had its biggest drop since President Luiz Inacio Lula da Silva took office Jan. 1, extending a week of declines that has driven up government financing costs.

...fell 2.5 cents on the dollar, lifting the yield to 12.6 percent ... bond slipped 5 cents last week as Lula faced growing opposition in Congress to his bid to cut spending...

Brazil may face higher borrowing rates when it next sells domestic debt as soon as tomorrow. The 2.5 billion reais ($806.5 million) of fixed-rate notes that the government sold last week at a yield of 21.5 percent now yield about 22 percent.

Merrill Lynch & Co. last week cut its recommendation on Brazil's debt ... said emerging- market bonds in general now are more vulnerable.

"Maybe some people will start to think this central bank doesn't understand this market as well as the previous one."

Any further rise in U.S. Treasury yields or setback for Lula in Congress may push Brazilian bond prices down more, Standard Asset Management's Binder said.

------(see url)-----

The Brazilian currency looking shabby against the dollar, which itself is no pillar, either, but it benefits none the less from Brazilian capital in flight. At some point, however, the focus must come off relative nominal measures of performance, and when investors look to reality, there is gold.

R.

http://www.djnewswires.com/cgi-bin/displayStory.pl?storyId=20030804DN009049.xmlHEADLINE: Argentine Peso Falls For Fifth Session

BUENOS AIRES (Dow Jones)--Argentina's peso started the week by slipping another 0.7% Monday...

Some traders blamed the peso's continued fall on collateral damage spreading from neighboring Brazil as its currency, the real, has weakened...

Over the last five trading sessions, the peso has shed nearly 4.4% of its value from increased dollar buying...

...dollar buying by private banks has helped drive the peso lower and allowed the central bank to scale back the market interventions it had been conducting in efforts to contain what had been an upward trend in the peso. Last week, the Argentine monetary authority bought up a total of just $44 million in five days of trading...

----(see url for full article)----

On this bit of dollar interest, ditto the comments I made following the previous post on the Brazilian situation. That is, at some point as the dollar fundamentals are fairly scrutinized, the focus of investors must shift from relative measures of nominal performance, and when they look to reality, behold!, there they will find gold in all its tangible glory.

R.

http://www.al-seyassah.com/arabtimes/business/view.asp?msgID=758HEADLINE: Mahathir revives call for East Asian economic grouping

KUALA LUMPUR, Malaysia, (AP): Malaysian Prime Minister Mahathir Mohamad urged East Asian countries Monday to establish an economic grouping that would strengthen their influence in international trade and stop Western powers from determining their financial destiny.

"We are not cows to be led by the nose," Mahathir said in a speech opening an East Asian economic conference. "We owe it to our people to amplify our voice, to aggregate our weight, to boost our clout."

"Our very lives, our entire future hinges on decisions made in Geneva and Washington and New York," Mahathir said. "Yet our voice is seldom heard and even more seldom heeded."

...After plans for the grouping stalled, Mahathir blamed the United States for pressuring Japan and some other nations not to support the idea.

... "...the IMF is not as independent as it should be. As we know, there are other hands which are controlling it and those hands have other ideas contrary to the prosperity of East Asia," he said.

-----(see url for article)-----

When an institution (IMF or dollar) stops being of beneficial use to its customers, change must take place premptively from within or they will be delivered from without if that institution is to remain relevant. Either way, "as is" days are numbered.

R.

http://www.usagold.com/DailyQuotes.htmlSnip:
"There is less gold per person than at anytime as the global population continues to grow. Gold is becoming ever more precious and rare. Curiously many news sources are grossly misinformed about the availability of gold and report that the world's central banks have over 50,000 tons of gold to sell. Nothing could be further from the truth as even the most conservative estimates including the World Gold Council and Gold Fields Mineral Services average about 32,000 and much of that is accounted for as gold that has been loaned (and likely will never ever be returned). Some estimates even peg the amount of central bank gold as low as 15,000 tons. Whether this misinformation campaign is by design to help shorts maintain positions, to allay fears of a shortfall in central bank reserves, to prevent a larger price rally or some other nefarious purpose is unclear...."

I am wondering why we aren't seeing the price of gold shown in euros. If the dollar is slipping against the euro, does that mean it would be a good idea to buy eros then buy gold with euros?
Is this a really dumb question?
msglory

http://www.financialsense.com/editorials/2003/speck0803.htm
Snippit:

August 5, 1993: 'In a matter of seconds' the gold price dropped by $10 when COMEX trading opened in New York -'technical blitz of selling' had taken place. Observers talked about a 'bloodbath', they were 'speechless' and puzzled by the reasons - that's how newspapers described the first action of the financial institutions against a strong gold price.

Since then, gold price manipulation has been characterized by a pattern of sharp drops in prices during the New York trading session. It nips any emerging optimism in the bud. Furthermore, the gold price suppression is organized in the US. The following intraday-seasonal chart clarifies this pattern. It depicts the average intraday course of the gold price over the last 5 years.

What is the background? In 1993, the prior rise of the gold price led the responsible heads in the FED and in the US-government suppress the price. Thus, losses of private banks were reduced, which had taken net short positions through gold lending. In addition, the intention was to weaken gold as a competitor of the dollar, bonds and fiat money in general. At the same time Treasury undersecretary Larry Summers started to talk about the Strong Dollar Policy. Before that, he had examined the inverse relation between gold and interest rates in a paper. Another indicator: One month before the start of the gold price suppression FED governor Wayne Angell talked about the relationship between gold price and the dollar, interest rates, and inflation expectations. He said, it would be 'very easy' to 'hold the price of gold'.


Black Blade: Interesting chart analysis.

http://www.lbma.org.uk/statistics_current.htmAt the url above you can see the price of gold in dollars (USD), British pounds (STG) and euro (EUR).

This being just a snapshot of a moment in time of the gold and currency market, and though they appear nominally different, mathematically they are equivelent prices when the currency exchange rates are considered.

By the way, you can always locate this page by clicking on the link that appears at the top right of the discussion forum text. Just click on the words "Gold Lease" next to "24-Hr Quotes".

R.

http://cbs.marketwatch.com/news/print_story.asp?print=1&guid={ADC30E6F-64A1-4C6F-8665-EAE386090556}&siteid=mktwSnip:
"James Bianco, who must get up very early to put out his excellent "News Clips/ Daily Commentary" service, was positively enraged Friday morning that the New York Times and Washington Post had no story on bonds' crash. Bianco believes the Fed has signaled it will fight deflation with inflation -- and he fervently endorses the harsh judgment expressed by Jim Grant of Grant's Interest Rate Observer: "A tremendous mistake."

John Mauldin, a Texas money manager who puts out a free weekly commentary, says flatly:" If this bond market does not stabilize soon, it puts at risk the mortgage refinancing business, which will put at risk consumer spending growth, which will result in the end of this period of the Muddle Through Economy. The Fed action could result in a recession within a year if the bond market does not stabilize, and soon."

"US debt markets are in extremis. So far, the US Dollar and the US stock markets have NOT reflected this condition, to the utter amazement of everyone who has noticed what has happened to debt yields. Gold WAS reflecting this condition - LAST WEEK. This week, the ubiquitous funds have been rallied into action and have dragged the US gold price all the way back to where it was at the beginning of the latest rally. "The reason why this has been done is painfully obvious. Next week's Treasury refunding auctions is probably the most important in the history of that institution. At stake is much more than the continuing profligacy of the Bush Administration. At stake is the entire superstructure of the global financial system based on the fiat US Dollar as the reserve currency. Treasury debt paper is both the ultimate reserve upon which ALL (with the partial exception of the European Union) global financial systems are built. It is the ultimate "safe haven," the financial instrument which, above all others, IS TOO BIG TO FAIL."

@ Lady Waverider - Not wanting to be too snide, though Peter Brimelow's headline may - after all - come to be too true! ... Bounce, they will, and maybe sooner than anybody would have "thunk"!
cb2

http://biz.yahoo.com/rm/030804/minerals_placer_hedges_2.htmlKALGOORLIE, Australia, Aug 4 (Reuters) - Canada-based gold miner Placer Dome Inc (Toronto:PDG.TO - News) said on Monday it plans to reduce its hedge book by about one million ounces to less than 10 million ounces by the end of 2003.

Max......They better get on it. They'll still have 300 tonnes of hedge left. If they sold forward in dollars (what else?) and dollars are set for a ride down....well.......at least I'm sure the management has arranged a few golden parachutes for themselves.

http://biz.yahoo.com/djus/030804/1844001200_1.htmlAngloGold to buy Ashanti.

http://biz.yahoo.com/rm/030804/minerals_gold_2.htmlThe annual gold conference of Kalgoorlie is contemplating the future POG. What a waste of talent as the real reasons behind the ongoing gold rush is patently overlooked...

... Or is it rush to gold? You'd be da judge! cb2

http://www.iht.com/articles/105101.htmlAs seen by IHT - today - on page two - http://www.iht.com/pdf/ihtfrontpage.pdfd - and that is its front page ... real nice! cb2

http://www.iht.com/articles/105086.htmlIt's all there in the media, only potential financial routs are a little more obscure than other topics on the he(r)a(l)d lines or front pages, as it is.

Oh, well, I'm starting to get sarcastic and miss Art Buchwald - sorely - cb2

PS - sorry to be a nuisance tonight - will follow up tomorrow ... ;>)

http://online.wsj.com/article/0,,SB105821907468731900,00.htmlClink! said in msg#: 106699
The 'revolution' isn't going to come from either the US or Europe

This is an article which appeared just over a month ago in the WSJ
http://www.libertarian.to/NewsDta/templates/news1.php?art=art322 (if the WSJ-link doesn't work)

A Real French Revolution
HOPE FOR THE FUTURE
by Sabine Herold, and others
SNIP
Something has changed in France. Suddenly there's hope that
the overwhelming weight of the state can be made lighter, that powercan be taken back from the unions and the civil servants. The outpouring of support for our new group, "Liberte, j'ecris ton nom," (Freedom, I write your name) has surprised even us. We're young men and women with liberal ideas, but even the media is now taking notice.

This is Herold's org
http://www.beloved-freedom.com

This is the latest news http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2003/06/28/wshout28.xml&sSheet=/news/2003/06/28/ixworld.html

"Ideas result in actions and actions result in (unforeseen) changes"

I'm sure those changes will also be auri-monetary.

http://hollings.senate.gov/~hollings/statements/2003804B32.htmlI'm going to take a chance and post the entirety of this message from Sen. Ernest Hollings, Democrat,South Carolina, with the hope that he won't be too upset with me as long as I put up a link back to his home page. Unfortunately, he's talking about retiring which is his perogative, and I wouldn't want to talk him out of his well-earned chair on the covered veranda -- mint julep in hand. Sometimes something hits you just right the first time you read it. I have to admit that Sen Hollings touched on some of the things I've been thinking for some time now. Thought I'd share it with you. I only wish that this thinking were not the fading part of America. Unfortunately, I fear it is............

CB....Great article on Vienna -- Why do I feel more comfortable with the Viennesse mentality over the Brussels??? Perhaps it's because it falls closer to home......
______

HOLLINGS: "With all of this attention, radio, tv and press, I'm constrained from changing my mind. I want to confirm
what you have all suspected, that I will not be opting for re-election this next year. I say what you all suspected in that I
indicated that last year, and we haven't had any fundraisers in this state for four years. It's not that we are quitting; we
have a good year and a half worth of work. "I'm truly worried about the country's direction. And a friend just mentioned
you never hold back, but 'now you're leaving and not running, you're going to say anything and everything.'

"I said no I can tell you this categorically, we've got the weakest president and weakest government in the history of my
50 years of public service. I say weak president in that the poor boy campaigns all the time and pays no attention to
what's going on in the Congress. Karl Rove tells him to do this or do that or whatever it is, but he's out campaigning.
And I really don't think our friend Mark Sanford likes the job. As a result the state and the country � your state, my state,
our country � is headed in the wrong direction with respect to our finances.

"You can see it at the state level. They are firing a thousand teachers.

"And at the national level, we've got Enron accounting galore. The President said two weeks ago on page one of his
budget report that we have a $455 billion deficit at the end of next month; that's when the end of the fiscal year
terminates. The truth of the matter is, you turn to page 57 of the report and you'll see it's $698 billion. And he admits to a
$700 billion deficit, so you can see why the market goes down. Everyone sees who invests that there's no reason to
invest because the interest rates are going up and you can't carry your investments.

"Otherwise, riding up here, I saw this state could care less. I just saw Carolina license plates, Tiger paw license plates,
they just can't wait for the kick-offs here at the end of the month. They just don't worry about the 60,100 textile jobs
alone we have lost since NAFTA. We always brag on BMW in Spartanburg County. Ten years ago we were down to 3.2
percent unemployment there, and now we're at 8.5 percent unemployment. And in the country this is endemic. In the
country itself, we don't make anything any more.

"I had to make a talk on trade last week, and I looked it up and found out that at the end of World War II we had 40
percent of our workforce in manufacturing. And now we're down to 10 percent. We've got 10 percent of the country
working and producing, and we've got the other 90 percent talking and eating. That's all they're doing.

"And we're eliminating jobs � hard manufacture, service, high-tech � all except the press and the politicians. They don't
import us. If they'd imported us, they'd get rid of us, too. I can tell you that right now, because we're not making
anything any more.

"I'm still working around the clock for the next year and a half, and of course after that I'll be looking for a job. But you
can see it's not easy to get one, by the time I go out and work and make a living.

"Let me answer some of y'alls questions. Y'all have been courteous and considerate, and everything else of that kind. I
argued all last week -- I got the best staff and my staff is my best friends. And they wanted to have a more formal
occasion, and have all kinds of crowds around me, to see if a thousand people would be there. But you see there's a
thousand on the other side, y'all are so happy that I'm getting out.

"We're going to put out a list of accomplishments. The people of this state have been unusually good to me since I started
up in 1948, and I've been elected seven times to the United States Senate. Now it's time for someone else to take over."

test

I wonder if someone would be so kind as to help a novice with Bonds 101.

Since gold put in its lows of 252 & 255 dollars interest rates have fallen and fallen to 40+ year lows and the stock market bubble has burst.

During the same time frame, approximately 2 years now, gold has performed well. So what has happened. The stock market has had losses for 3 consecutive years, 2000-2002 and the yields on bonds have been miserable.

So correct me please if I make an incorrect assumption from this point forward. It seems that the opinion of Joe Average Investor has been if the SM is producing losses and the yield on bonds is peanuts then a probable 'safe haven' is in gold. I have a small fund through my employer that is 100% into 90-day T-bills. The return is a joke, I might as well have the money in a matress.

There seems to be a general consensus that 'real' returns, that is, the return after inflation is what counts. At the present time 'real rate of return' is slightly negative, perhaps at best zero. If one is getting 1 1/2% out of a short term treasury against 1 1/2% inflation it works out to be a wash.

So now we may, or may not be, encountering a bond market bubble bursting scenario. I believe it is the 10 year bond that has rocketed from 3.08 (or it that neighborhood) to 4.35%. I have not seen today's action so I'm not exactly sure where we are at. (By the way does someone have a link where we can get a look at all notes/bonds for various time horizons).

Anyway......a handful of gold analysts are tickled pink that the bond market is rolling over. I'm not sure if I understand this. Gold has done well with the BM going up (yields down) and I understand this but I don't get how it is still applicable with the BM going down (yields up).

How does it work both ways?

The only thing I can perceive is the 'real return' business getting whackier. If the BM is perceiving inflation down the road, perhaps sooner than latter, we may experience a 'real return' that is 'more' negative than today's. Suppose short term rates (ie: 90 day) racket up to 4% while inflation accelerates to 5%. Now we are in a negative pickle large.

Am I okay so far?

So where does the inflation come from? From a weakening dollar of course. If the dollar begins (resumes?) falling ALL things bought (imported) become more expensive. Clothes from China to oil from Saudi to NG from Canada all become more expensive if the dollar falls against other currencies.

So....the bond market is betting on a dollar crisis, or at least a little one or the start of one. The dollar was marched from 120 to 95, I believe, in a orderly devaluation to see if things could be worked out. It did not, the twin deficits are still way out of whack so the dollar will be dropped down more.

It is not so much the bond market level or value or the yield derived from these numbers it is the 'real' rate of investment return. Why would one invest $X into an asset to get $X back after inflation or worse yet in the case of currency meltdown $X -y. So the next few weeks, couple months are going to be very interesting. Let us watch to see if the dollar takes the next leg down and to what level.

I think I heard mid to upper 80's was the level that analysts expect for this round.

Thoughts?

TIA

M'enfin, ce n'etait pas de cette revolution-la que je parlais !

Interesting article, even though her speech hasn't been particularly well translated. (Somehow, what sounds OK in French comes across as rather pompous in English. It's probably because the Latin, which French is mostly based upon, tends to be reserved for the more complicated words in English, while everyday English tends to be Germanic in origin.) I can sympathize with the ordinary French worker. When I was living there, it became almost a tradition that the postal workers would strike at the beginning of December, and it doesn't appear to have gotten any better. I never did understand the logic of the 35-hour week, as, while it may have allowed some more people to work, it also penalized the employer as their wages didn't drop. Mind you, if the employer is the state, that's alright then, isn't it ? For professional people, it's realized that they don't work by the hour, but to fulfill a job function. They still work 37.5 hours (I believe), but now get 7 weeks of vacation a year ! This might not seem a problem for some people, but the dislocations at work due to prolonged absences (both because the person isn't there, and when he/she is back, it takes them a long time to readapt to working) are significant. Not to mention that people are starting new hobbies for something to do, which is costing them a lot of extra money !

It is interesting that in this veritable sea of socialism which they are fighting against, the French are the staunchest defender of gold I can think of. A big 'NON' to gold leases !

C!

PS. What is refreshing about this group is their age - when was the last time that you heard of anyone in the US under 40 even discussing economics (21mabry excepted), let alone organizing a protest. Nah, as Senator Hollings pointed out, there are more important things to be concerned about, like football, for instance !

http://groups.yahoo.com/group/gata/message/1597Reuters quotes company official at conference
in Australia.


To subscribe to GATA's dispatches, send an e-mail to:

gata-subscribe@yahoogroups.com

http://www.etherzone.com/2003/henr080503.shtml$2 BILLION A DAY
WHERE'S IT GOING? By: Ed Henry
Two thousand million a day, that's the minimum the Bush administration is borrowing every day, weekends and holidays included.
In the month of July, 2003, the national debt increased $81 billion. That's an average of $2.6 billion a day (TWENTY SIX HUNDRED MILLION PER DAY), all on the tab for you and your grandchildren to pay back some day.
Three point eight percent (roughly 4 percent) of the money borrowed in just one day would have saved the AmeriCorps organization of volunteer teachers and college graduates mentoring our poorly educated public school students who cannot read or write. But Congress left on its month long summer vacation without approving an emergency $100 million it would have taken to save 50 percent of these volunteers. And the school year will be underway before Congress goes back to playing their games at our expense.

George W. Bush talks a great story, but there's little substance in the follow up. It's almost as though the man from Waco believes that if he makes speeches about what he intends to do, that's enough. There's no need to really do it if Americans believe and give him credit for what he intended.
It isn't just education this republican administration has cut, it's everything but defense. And there is no reason for it. At least there doesn't seem to be a reason other than to reduce the American standard of living to that of a third world country in order to level the playing field for the New World Order.
Let's face a few facts.
Knowing full well that the recession we are not having would produce federal revenue of only about $1.8 trillion in fiscal 2003; the federal government went right ahead and planned an annual budget of $2.1 trillion. In other words, they deliberately set out to run a deficit of $304 billion that would be made up for by the federal government's unique ability to borrow us into oblivion by selling U.S. Treasury securities.
With receipts even less than expected, that deficit is now anticipated to be $455 billion ($151 billion more than anticipated) and that's not including the $150 to $200 billion they steal from Social Security and other entitlements and hide just as Enron hid its debts.
Figure it out for yourself. Borrowing a minimum of $2 billion a day 365 days of the year gives you what? That's the real deficit including the outlandish annual interest the Beltway Bandits simply hand every entitlement on top of the cash stolen, putting all taxpayers further in debt.
On May the 28th, not wanting to appear too greedy, Congress increased the national debt ceiling $984 billion when they might just as well have made it a full trillion. That fantastic amount of borrowing is expected to be gone by this time next year.
Wake up, it gets worse.
While the millionaire monitor readers of what passes for news in this country were dutifully keeping their mouths shut, the fact that we hit the national debt limit of $6.4 trillion 92 days earlier on February 20th went unnoticed by most of the public. The result was that the federal government was able to put a three month one full quarter of the fiscal year squeeze on every state and local government in the nation.
Over that period of time, without much of the federal money for budgeted programs from housing, block grants, education and Medicare to Homeland Security and on top of their own shortfalls in revenue, states and local governments were forced to take drastic action. Increasing local taxes one way or another plus layoffs of government people in programs common across the nation.
Did it hurt the federal government? Not a bit. Once the debt ceiling was raised, the Beltway Bandits immediately made up for everything by borrowing every cent they had unable to borrow during the 92 day dry spell. The national debt shot up $118 billion in the month of June alone.
Having used money budgeted for other purposes to conduct an invasion; the federal government now had its larder replenished. Did they then revitalize the programs they had shorted for three months? Absolutely not.
Many states and local governments, having once adjusted to the crisis, now find themselves in further economic straits. More cuts and layoffs are anticipated.
President Bush claims to be providing tax cuts for everyone and continues to harp on the idea that every parent will receive a $400 break for each child, but the critics claim the tax breaks mostly benefit the extremely wealthy, not the common man.
Most taxpayers will find that if they get any break at all it will be offset by increased taxes at the local level or doing without essential services like street maintenance and police. Local police are not even getting the funds for Homeland Security the feds want them to add.
Can this go on?
Maybe. As long as investors are willing to contract with the government for U.S. Treasury securities, in affect loaning the government money, the Washington borrowholics would seem to have an unlimited source of additional revenue, a wide open credit card. Of course, these investors must maintain faith in the American taxpayer's continued ability to pay them annual interest plus a payoff at term, and there are signs that this faith may be diminishing.
The borrowholics try to maintain the fiction that they have money other than what they get from taxpayers and can somehow manage this huge debt. For instance, the term "Intragovernmental Holdings" that accounts for about 43 percent of the national debt is meant to imply that one governmental body owes another and it's just a matter of insider tradeoffs, but it isn't true. Reducing this debt requires taxpayer money and in most cases is a form of double taxation, plus interest.
Statements from politicians to the effect that "the government always pays its debt" is meant to make people believe that the money to do this comes from somewhere other than the taxpaying public. There is no other source, other than more borrowing, and the politicians couldn't handle it themselves even if they were all John D. Rockefeller clones.
In short, U.S. Treasury security sales or what is commonly referred to as "the bond market" is just as much of a bubble as the stock market, subject to faith and all sorts of spurious notions.
On Friday, August 1, at 5:31 pm Eastern Time, Reuters issued a report titled "Mortgage Havoc Wreaks 100-yr Storm on Bond Markets."
The first paragraph of this article reads: "Nightmares became a reality this week in the massive fixed-income sector as one of the worst band market plunges in the past decade only got worse. Traders and investors alike fear the trouble isn't over yet and, come Monday morning, the turmoil could continue."
In yet another article titled "Man Your Battle Stations, This is No Drill" Bob Moriarty said; "Worldwide derivatives in total are above $150 trillion dollars. We have derivatives on derivatives on derivatives. And no one wants them really marked to market or the financial system is going to collapse. It may do so anyway, the invisible bond market crash of the last 6 weeks is causing more problems than you can possibly dream of."
The big mortgage houses like Fannie Mae and Freddie Mac are selling off Treasuries while some of the government's biggest lenders, China for example who loans the U.S. about $300 billion a year, are liable to seek other investment. Top that off with the Euro supplanting the dollar and you've got a condition of factors that could amount to a financial perfect storm.
All in all, the Bush administration may find that its credit card is not as wide open and unlimited as once thought.
"Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact."

There was a few tense seconds in time before Lady Waverider released her grip upon her sword. Maybe its time to see the others. After you Cougar, and she motioned to the stairwell. Thank you, My Lady and Cougar bowed and then the two desended the stairwell. They reached the Council Chamber and entered. Inside was Sir M.K.,Sir Black Blade and Gandalf seated at the Oaken Table. They stood up and greeted them. Did you sleep well, Cougar?, said Sir M.K.Well enough'said Cougar. Sir M.K. watched Lady Waverider move quickly to Sir Black Blade's side, catching his attention. Are things fine, Lady Waverider, he asked. They are Sir M.K. but she grabbed Sir Black Blade's cloak and turned him to hide her face from Cougar. He knows about the contents of the wagons and seems to know about the armies we fought in the north, she said softly. Sir Black Blade turned and looked at Cougar only to be greeted by a stare. They all sat down at the table. Gandalf was uneasy.
Please continue from last night. I am very interested in what you have to say'said Sir M.K.
Cougar began. I have told you where I come from and why I am here, but there is more to tell. You have lived well since the battle on the plain in the north. I say now that the future may hold uncertainty for all of you. There is a dark force that is is unfolding upon the land. One that at this time uses no material weapons. Only weapons of words.
There deception is placed on the ignorant and many have fallen to this preception. I will tell you that the foe you fought in the north was just part of a bigger plan to destroy Gold and its great attributes. To acquire as much as they could before destroying the wealth of the populace. Giving them no hope. Then declaring gold the same as iron and steel when all seemed lost. Making them the rulers of the realm.
Who are those who do this crime, said Sir M.K.
I do not know for they are well hidden in the cloak of secretcy, said Cougar.
Then how do we know you are not a spy sent to observe and to trick us? said Sir Black Blade.
Cougar stood up and took hold of his axe in his waistbelt.
His movement spurred Sir Black Blade to rise and withdraw his sword fom his sheath and raise it, ready to strike. Sir M.K. shouted, SIT DOWN. There will be no fighting in this room. The two settled back into their chairs. Sir Black Blade inserted his sword into the sheath but still holding on to the hilt.
Cougar again spoke. They know of you here. They will send emersaries and seek trade and when all is fine they will begin their deception. Take heed. They will raise a army of vast numbers never seen before when their cause becomes just.
Cougar then turned to Gandalf. Tell me Great Wizard, What do you see.
Slingshot----------------------<>

History channel is running a show on the trail people took to get to the alaskan gold rush in the late 18 and early 1900s.They have a group of men and women trying to make it there using the tech of that time.It looked difficult,people must of been of a hardier stock in those days.One interesting part had a women who brought a sewing machine with her'she said that was what she would make her living with in the yukon.The trail became more difficult and the men refused to carry it as they could only manage necessities,the woman had to leave it on the mountain as she could not manage it.She left it even though she new it would make life difficult for her without the tools of her trade.Thats what life is about making tough decisions and living the results of those choices.21

http://www.upi.com/view.cfm?StoryID=20030804-022903-7609r
Snippit:

HILLAH, Iraq, Aug. 4 (UPI) -- A routine Iraqi traffic stop has turned up what may be $90 million in gold bars in this town just over 50 miles south of Baghdad. An Iraqi police officer stopped an oil tanker truck on the road in Hillah July 27, part of a crack down on black-market oil. There was a problem with the license plates, and the registration didn't match. The truck was taken to the impound lot. Three days later, a security director for the governor of Hillah took a call. If he would let the tanker truck go, he would get $15 million Iraqi dinars. The man refused. The caller offered $30 million dinars, about $30,000 U.S. dollars. The man, who earns no more than $500 a month, refused again.

But he got curious. He went out to the truck and opened the back. Inside, stacked three feet high and 20 feet deep were gleaming gold bars. "This guy called me. He said, 'Big, big surprise, you love me now. We have metal, much metal," laughs Maj. David Holahan, the boisterous chain-smoking executive officer of the battalion. "I told him, 'You're an Arab. You know if someone offers you 30 million, its worth 90! You're a fool to take the bribe!'" The Iraqi got five other government workers and six padlocks. Each had a separate key for each lock so none could open the truck without the others. The next day he drove the truck to the American base in an old pistol factory in Hillah and turned over the truck. Holahan took three of the keys, and left the six locks in place. It would be a join U.S-Iraqi project to count the bars.

The Marines are still not sure what the metal is -- other bars thought to be gold have turned out to be brass or other metals. But pictures of the bars show gleaming yellow bricks. "Whatever it is, it's precious to someone," Casado said. A group of Marines and Iraqis attempted to count the bars, but after stacking close to 250 of them with probably 75 percent more to go, they gave up. "Once I decided it was too much trouble, to me it became like lifting 40-pound dumb bells." The gold will be tested by metallurgists sometime soon and somehow returned to the Iraqi treasury. No matter what the tests reveal, Holahan wants to tell the Iraqis it is gold anyway. The discovery has already paid dividends in civic pride. Holahan commented to one government official that he "got Saddam's gold!" The man answered, "No, we got the Iraqi people's gold."


Black Blade: Ah yes, them "barbarous relics" and all the trouble of lifting them too. Trying to bribe away mere "barbarous relics" with all those precious Iraqi dinars. Go figure. ;-)

http://biz.yahoo.com/rf/030805/markets_japan_takenaka_1.htmlSnip:
"Japanese Economics and Financial Services Minister Heizo Takenaka, who leaves for Washington later on Tuesday, will meet U.S Treasury Secretary John Snow, Federal Reserve Chairman Alan Greenspan and White House Council of Economic Advisers head Gregory Mankiew.

The sharp rise in Treasury yields -- benchmark 10-year note yields have risen 117 basis points since mid-June -- and fallout in other bond markets will have been keenly watched by Japanese policy makers, given the country's massive U.S. debt portfolio. Official Japanese holdings of U.S. debt have swelled this year on the back of record-breaking yen-selling intervention, which totalled $75 billion in the first seven months of the year. While Japanese yen selling means the dollar cannot weaken, making U.S. exports less competitive, Japanese purchases of U.S. bonds help hold down U.S. interest rates. This symbiotic relationship may be behind Snow's assurances that the U.S. would not criticise the Japanese government for interventions aimed at keeping the yen from appreciating to the point where it might slow Japanese exports."

http://www.urbansurvival.com/week.htm"And at the national level, we've got Enron accounting galore. The President said two weeks ago on page one of his budget report that we have a $455 billion deficit at the end of next month; that's when the end of the fiscal year terminates. The truth of the matter is, you turn to page 57 of the report and you'll see it's $698 billion. And he admits to a $700 billion deficit, so you can see why the market goes down. Everyone sees who invests that there's no reason to invest because the interest rates are going up and you can't carry your investments.

"I had to make a talk on trade last week, and I looked it up and found out that at the end of World War II we had 40 percent of our workforce in manufacturing. And now we're down to 10 percent. We've got 10 percent of the country working and producing, and we've got the other 90 percent talking and eating. That's all they're doing.

The end of this train is drawing nearer and nearer as every day passes.....

That AmeriCorp "paid volunteers" need to teach basic skills like reading says a lot about the state of the nation. But it's not for a lack of funding to the schools. Look elsewhere, to our values and culture. Education funding as a whole just keeps increasing but results tank. I find it hard to accept Mr. Henry's assertion that government social spending has been cut. The education and agricultural bills are examples. For instance, yesterday I attended a luncheon for our new Provost paid for by Federal dollars. Each table had two nice floral arrangements that had to cost $20 each at least and the buffet was high quality food with multiple selections and dessert. I will not go into the increased funding for associate directors and new vehicles. The problem dear posters is that government spends too much and the results are too little and too political. I've spent my own time and money trying to help illiterates with high school degrees. The answer is to return power and responsible to local communities. The Feds are mostly just good at spending money. IMHO.

http://www.bloomberg.com/news/markets/bonds.htmlSnip:
"U.S. Treasuries fell in New York trading before the government starts selling a record $60 billion of debt to fund a widening budget deficit. The Treasury will auction $24 billion of three-year notes today, $18 billion of five-year notes tomorrow and $18 billion of 10-year debt on Thursday, exceeding the record $58 billion last quarter. The White House estimates the budget deficit will be $455 billion in the year ending Sept. 30."

Waverider: 30 year T bonds are sinking like a dead fish this morning...the begining of another "volatile" day in the bond market?

http://www.cairns.net.au/~sharefin/Markets/Charts/PLGCMA.htmI recently observed that platinum prices are getting way ahead of gold since 1997 and are in the 2 to 1 ratio now vs the typical 1.1 to 1 over the prior years. A little platinum research shows that 50% goes for industrial use, 40% jewelry (mostly far East) and 10% investment. I would expect current platinum prices to be under pressure caused by reduced industrial demand. About 80% of platinum production comes from South Africa and 10% from Russia. There seem to be no large stockpiles of platinum that can be used for price suppression
Perhaps the price of platinum is reflecting greater demand as jewelry and investment? In any case we can assume that the price of platinum is not managed as are gold and silver. Platinum may be a better barometer of the unmanaged precious metal market than are gold or silver. What say the forum's experts about this subject?
Boilermaker

http://focus.comdirect.co.uk/en/detail/_pages/charts/main.html?sSymbol=ZBU3.CBT...OUCH...

http://www.usagold.com/gold-coins.html

@ Lady Waverider - Seems the 60 Billion auction in 3 tranches this week will command essentially higher yields, if at all successfull. We'll find out soon enough.

The dictatorial setting of IR's by the FED will be severely tested in the next few days. Guess Mr. Market will have a word or two to say at this critical juncture of the Bond and by extension the Fiat $ reserve currency.

... while gold is under heavy attack from the paper dealers, I can only say thank you for another unexpected opportunity to accumulate more gold weight for the bang, er Buck. cb2

Yes...we'll see which way the bond bounces...as it were ;o) Isn't 60 billion the approximate capitalization of the entire Gold industry - and it's just a week's auction for the fed! Cheers,
Waverider
BTW - I hope you are keeping COOLest...I spoke with friends yesterday in Zurich - 36 degrees!

A real sizzler over here and too long already - no reprieve in sight - fortunately no forest fires yet and thanks for your kind response.

Working on a gold deal is cooling my brow somewhat - kind regards cb2

platinum lead gold up silver finally confirmed golds move.as that was occuring platinum was/is setting up to repeat teh cycle . platinum leading pms up to stage two. + 5 federal reserve notes so far today!

Once again (as is often the case with these "fabricated" articles), if you do the math it doesn't add up.

Ok, so the Marines moved 250 bars at 40 pounds each, with about 750 still to go (according to the article). That is 40,000 pounds (20 tons) total. I suppose a truck could carry that much, but it wouldn't be easy.

According to the article, there is a pile of gold bars 3 feet high and 20 feet long. It doesn't say how wide the pile is, but you'd have to assume that it is as wide as it is high - 3 feet. But to compensate for air gaps between bars, I'll assume 2 feet wide of solid gold. That makes 120 cubic feet of gold. At 1200 pounds per cubic foot, that would be 144000 pounds (72 tons) total. A lot more than 20 tons.

Sounds like one of those "big fish" stories to me.

We are now getting the news that the 3-year auction response was "dismal". A disaster might be a better description. If the Treasury cannot fund the deficit through the auction process, it seems to me we have two options. Either, we close down the government due to lack of funding or the Fed monetizes the debt -- prints money -- in order to keep the government in operation. If there's another, I'd like to hear what it might be. The markets certainly are taking this with an almost spooky calm.

The outstanding question at the moment is why haven't China and Japan come in with their huge dollar reserve balances to support this bond market? What happened to the quid pro quo? I couldn't think of a more essential question under the circumstances.

There are probably a myriad of reasons ranging from the political to the purely financial. In the case of China, it might be a less than subtle warning not to attempt maneuvering China into revaluing its currency. Japanese investors might have an interest in buying short term paper only. Above and beyond all of that, you have the huge government deficits (and I mean the real deficit, not the political one) stretching into the distant future. Any bond purchased now will have suspect value in the future given the non-stop production of debt on the part of the US federal government.

A disaster in the making. As I said the other day, why gold would not be soaring as a result of this developing bond market disaster is beyond me. Don't be fooled by the summer doldrums.........Sooner or later all of this is going to sink in, and none of us at this juncture really know the full consequences, and the effect it will have on the financial markets.

If one has followed the Gold Trail here and gained understanding of the "bigger picture"; not getting netted and gilled with minutia and timing; then, one has built his house upon a rock of AU. Thanks for a wonderful four years running.

http://www.publicdebt.treas.gov/com/comcall403.htmAs August 15 approaches, here is the pertinent April announcement by the Treasury Department regarding the fate of 30-year bonds which were issued back in 1978 and are not yet due to mature for another five years.

Those maturity-minded bond holders expected to receive semi-annual interest payments of 8-3/8%, for each of their 30 years, but that is not going to happen.

Such is paper and the wayward promises for "delivery" that it tries to represent. See below, or follow url above.

Note the key phrase, "Securities not redeemed on August 15, 2003, will stop earning interest."

R.

---------------
Treasury Calls 8 3/8 Percent Bonds of 2003-08
FOR IMMEDIATE RELEASE
April 15, 2003

The Treasury today announced the call for redemption at par on August 15, 2003, of the 8-3/8% Treasury Bonds of 2003-08, issued August 15, 1978, due August 15, 2008. There are $2,103 million of these bonds outstanding, of which $1,314 million are held by private investors. Securities not redeemed on August 15, 2003, will stop earning interest.

These bonds are being called to reduce the cost of debt financing. The 8-3/8% interest rate is significantly above the current cost of securing financing for the five years remaining to their maturity. In current market conditions, Treasury estimates that interest savings from the call and refinancing will be about $270 million.

Payment will be made automatically by the Treasury for bonds in book-entry form, whether held on the books of the Federal Reserve Banks or in TreasuryDirect accounts. Bonds held in coupon or registered form should be presented for redemption to financial institutions or mailed directly to the Bureau of the Public Debt.
-----------------

[Hi, Randy again.] This is not an isolated occurrance. There were two last year and most recently a July-issued bond call to follow this August redemption, effective in November. See announcement below:

---------
FOR IMMEDIATE RELEASE
The Treasury today announced the call for redemption at par on November 15, 2003, of the 8-3/4% Treasury Bonds of 2003-08, issued November 15, 1978, due November 15, 2008 (CUSIP No. 912810CE6). There are $5,230 million of these bonds outstanding, of which $3,322 million are held by private investors. Securities not redeemed on November 15, 2003 will stop earning interest.

These bonds are being called to reduce the cost of debt financing. The 8-3/4% interest rate is significantly above the current cost of securing financing for the five years remaining to their maturity. In current market conditions, Treasury estimates that interest savings from the call and refinancing will be about $870 million....
---------

[Randy again.] And etc.

See Webster's on meaning of "BOND"

bond:
1) A binding agreement; covenant. 2) A duty, promise, or obligation by which one is bound. 3) A certificate of debt issued by a government or corporation guaranteeing payment of the original investment plus interest by a specified future date.

There is no cause to think that ANY form of paper gold is ever as good as metal gold; where "as good as" implies an assessment of performance through thick and thin. Experience shows againa and again how rules are changed and broken to benefit the suffering majority at the expense of the comapritively few who saw an angle and took a paper shot at a leveraged payoff.

Call Centennial for the real deal -- gold in hand -- because paper burns.

R.

Seems like the US government is not considered a creditworthy borrower for - get this!!!! - a $US denominated loan.

What does it mean? I don't know. One hypothesis: There's still a lot of $US-denominated debt out there. Maybe $US reserves are being held to pay down that debt. Once that's done, everyone is free and clear and, moreover, free and clear without defaulting on any obligations.

Alternatively, maybe the government wasn't offering good terms, and US-dollar lenders think better terms may be available in the future.

Who knows?

Here is a bit of marginally useful information:

Using the tire on my bus/motorhome as an example, eight of them on two rear axles (a "normal" truck setup) could carry a maximum of 48,000 pounds. That inlcudes the weight of the truck, but still leaves capacity for quite a pile of gold. A tractor/trailer that puts the load on 16 tires would easily carry 40,000.

Unfortunately, I won't need a truck that big for my stash anytime soon :)

- Survivor

http://www.dieoff.comI've often postulated the theory that we are not a petroleum-based economy. Human kind is, in reality, a petroleum-based CIVILIZATION.

no petroleum = no civilization.

Now I find that there is a web site devoted entirely to this premise (www.dieoff.com). Black Blade - you might find it interesting as it contains quite a lot of energy supply analysis.

The main theory is that without a large supply of cheap and concentrated energy (oil), the Earth can not possibly support the current enormous human population. At the present time, the human population is growing exponentially, while oil production has peaked and is now starting to decline. At some point, a crisis will emerge and the biggest bubble of all time (the human overpopulation) will burst. In other words, a massive die-off of humans. Not a pretty picture, especially for the "baby doomers".

I'm not sure how precious metals would do in such a scenario. But firearms and firewood would do well.

Who would want long term U.S. paper under ANY circumstance right now? Only someone defending an interest. Otherwise, with rules that become more ephemeral with each passing day and a country more reminiscent of early 1930's Weimar Republic only chumps and suckers will own them. On the other hand, who wouldn't want to own gold under ANY circumstance right now? The same people needing to defend a position. Methinks the brown corduroy pants are on standby in banking circles today. The eerie calm feels like two gunslingers right before someone blinks. The gun is certainly cocked.

In the money market today the Federal Reserve entertained $12.3 billion in overnight RP propositions collateralized by Treasuries, none of which offered rates higher than 0.96 percent, underscoring the idea that the open market is awash in ample cash seeking employment. Never the less, the Fed added $5.5 billion.

R.

http://www.usagold.com/DailyQuotes.html(excerpts)
New York spot gold settled higher at $349.50 an ounce, up 60 cents an ounce from yesterday's close. Gold prices closed nearly unchanged, gaining only a fraction of a percent Tuesday amid weakness in the broader stock market and mixed trading in the U.S. dollar. "The market is keying off of the macroeconomic perspective ... bracing for higher interest rates, as indicated by the Treasury markets," said John Person, head financial analyst at Infinity Brokerage Services.

Looking ahead, "gold will continue to be an attractive buy when it has significant pullbacks ... so I expect bargain hunters to step in and help support the metal near the $348 level, he said.

Gold's gains are related to ``the ongoing dollar diversification,'' said Ian MacDonald, the head gold trader at Commerzbank AG in New York. ``People are looking for alternatives, particularly in the Middle East and India, to the dollar. Gold is the favored currency right now,'' he said.


...AngloGold Ltd said on Tuesday it was likely to act fast to reduce Ashanti Goldfields Ltd's gold hedge book if it succeeded in buying the Ghanian mining house. Ashanti's hedge book brought the company to the financial brink in 1999 when bullion prices unexpectedly leapt, leaving it committed to buying high and selling low through a complex options structure. Ashanti has since simplified its hedging, with some 6.4 million committed ounces, but still shows an unrealised loss of $108 million. "We would be likely to move quickly to reduce their hedge book, as we are doing with our own," an AngloGold spokeswoman said.

...Gary Armor, an investment manager at AMP Henderson Global Investors in Sydney, said: "All the major gold miners have the same problem - their production is so large that they're unable to replace the gold they're consuming. "They're pushed into the situation where they have to make acquisitions." Newmont and rivals such as Barrick Gold, the third-biggest gold producer, are increasing their currency risk by buying rivals outside North America because their local options are more limited. Investors have said Newmont alone needs to replace 7 million ounces of gold a year to keep growing.

Paul Carter, an associate director at brokerage Paterson Ord Minnett in Perth, said: "The biggest issue for these global miners is being able to replace reserves and resources while keeping costs down. "Replacing 7 million ounces of production a year is a pretty hard task." Carter said: "Companies have been loathe to spend money on exploration and there haven't been big discoveries recently."

...gold producers continue to unwind hedgebooks and recent announcements suggest that the frenzy of dehedging is far from over. It is widely expected that gold production will continue to decline at an accelerating rate over the next 7 to 10 years.

----(see url for full report)----

http://www.usagold.com/cpmforum/archives/3120037/default.htmlSince this is the hot topic of the day, click the url above and scroll to this post for background if you were absent last Thursday.

TownCrier (07/31/03; 13:03:55MT - usagold.com msg#: 106575)
Comments on next week's quarterly refunding -- $60 billion in U.S. debt securities to be auctioned

MK - your comment on the response to the bond auction was the first I saw today. You bring up several good questions. Why the muted reponse in the financial markets? What will they do? Monetize the debt? Shut down government?

So here's my take.

I think we have been monetizing everthing they can to no avail. SM is being supported by big players (ESF, moneycenter banks, foreign bond holders, take your pick) - and really to no avail. We can't break the neckline on a 5 year SM top, and bond rates, i.e prices, don't make sense based upon our debt going forward and risk. So why buy?

Monetary policy is not working and appears it won't. The FED is a private corporation. Anyone think that they might have thrown in the towel and won't monetize the long bond for the same reason no one else wants them - maybe they are realizing that the light at the end of the tunnel is really a train. Why destroy their balance sheet any further, throwing better paper after bad. . .cash vs.debt.

The FED, IMHO, may be at odds so great with the administration (Treasury) that they are throwing down the financial gauntlet with the rest of the world, China, Japan, etc. The deficits have to go away before more debt can be sold?

If the administration cuts domestic spending government shutdown), major internal problems. So that leaves military. Best solution I can come up with is Bush needs to fall on his sword, pull the troops back, cut the military spending to the bone (taking a major recession in the process) and LEVEL with the citizens of this country as to what they tried to do, and failed. and get started on something economically sound that may have a future. (unfortunately I'm more convinced than ever that we've sold, leased, all our gold - the Rubin gang may have just looted the entire treasury. . .)

The muted response? If you wanted to get out of bonds in a big way, where do you go? I don't know. I'd like to think PM's, and we will get some, but all that accounts for is pocket change to someone like Gates.

Remember the old Vietnam saying of "Catch 22". Looks like we're here.

I'm staying in gold and silver and waiting like everyone else.

Pizz

http://biz.yahoo.com/rf/030805/markets_forex_yields_1.htmlHEADLINE: US bond yield/dollar link takes topsy-turvy turn

NEW YORK, Aug 5 (Reuters) - Regarded as airtight and fairly straightforward for the past few months, the relationship between benchmark Treasury yields and the dollar has become decidedly more perplexing.

Until two weeks ago, higher Treasury yields had come to mean a stronger dollar. Rising yields were driven by U.S. economic optimism, which had spilled over into the equities market and currencies.

But more recently, the relationship has fractured as the bond market assumed a momentum of its own and the dollar fell despite the surge in yields. On Friday, for instance, 10-year Treasury yields hit a one-year high of 4.59 percent, while the dollar retreated across the board...

What has happened to the bond-dollar's supposedly rock-solid partnership?

-------(see url for standard assessment)------

Not to be overlooked is that we may be seeing the beginnings of a shift in which the dollar no longer behaves as a reserve currency offering strength on top of strength -- in which falling bond yields are an indication of currency strength while rising yields pave the way for a stronger currency. Such is the privileged life of a reserve currency.

Where we see rising yields (interest rates) in tandem with a weakening currency, analysts should not be puzzled. It should call to mind the very clear picture seen repeated in banana republics everywhere.

This paragraph from the article is a telltale that points in just such a direction.

"Over the last six weeks, all mortgage-related activities have gone into reverse as the U.S. Treasury announced that the government would need to raise $450 billion next year. This has resulted in a massive bond sell-off that pushed yields to multi-year highs."

Call Centennial today or tomorrow and discuss with MK, Jonathan, or George a strategy for gold diversification that will protect you from the trials of lost purchasing power that arrive along with a depreciating dollar. The step down from reserve currency to regular currency is a doozy.

R.

http://www.philly.com/mld/philly/business/6458729.htm
As rates creep up, the effects are starting to be felt in the industry, the markets and the economy.

Snippit:

Former Federal Reserve Board governor Lyle Gramley complains that bond investors aren't taking their cue from the central bank. Fed Chairman Alan Greenspan wants low rates, but he has been getting the opposite: Mortgage rates are hitting levels not seen since last summer. "This hard shift [in mortgage rates] has really taken everyone by surprise," said Keith Gumbinger, a vice president at HSH Associates, a Butler, N.J., research firm that tracks national interest rates. (but not a surprise to Black Blade).

The mortgage industry is already feeling the pain. After successive waves of mortgage refinancings, the Mortgage Bankers Association of America's weekly mortgage application survey hit an air pocket. Refinancings fell 33 percent in the survey completed July 25. "Certainly in refinancing, we're seeing a big drop-off," said Jay Brinkmann, a vice president of the mortgage association.

Mortgage bankers face slimmer pickings, along with appraisers, surveyors, and title company employees. "There's no question that rates have an influence on how much the phone rings," Blaston said. In the long run, rising rates knock first-time homebuyers out of the market. This time around, they may also discourage second- and third-time buyers if a move-up sale means giving up a 51/4 percent loan for a more expensive one. If borrowers cling to those low rates, there is more trouble ahead for investors who hold bonds backed by pools of mortgages sold by Fannie Mae, Freddie Mac and Ginnie Mae.

Banks and other institutional bondholders bought Treasury bonds to protect themselves against another wave of refinancing, said Zandi of Economy.com. The hedging activity backfired in July as it became evident that the risk was rising interest rates, rather than the reverse. Treasury securities dropped in price, and the bonds backing low-rate mortgages found new life. "They weren't prepared for this kind of volatility," said Kotok, of Cumberland Advisors. "Bonds now show a bigger volatility than stocks."


Black Blade: If today's dismal Treasury auction is any indication, then it will get much worse as a wave of Treasury auctions is planned to accommodate soaring national debt (that also must be serviced with additional funding). Insiders at home construction firms are also selling shares at a furious pace, which is not a good sign for the refi and mortgage market. Looks like the real estate bubble is popping. This was really not a surprise for anyone paying attention to the obvious signs. Freddie Mac was recently positioning ahead of the decline and was caught red handed. The drones on Wall Street say they are "surprised" at the rising rates but I don't think even they are that stupid (but then again�). I for one will be watching the bond auctions the rest of this week as the 5 and 10 year notes are offered. It should get very "interesting".

Boilermaker, at that ratio it may be time to trade platinum for gold.Boilermaker I gotta ask is that your trade or is it in honor of that lethal drink combination.21

http://www.nypost.com/business/2364.htm
Snippit:

First, let me say that I hope I'm wrong about this. But the way in which interest rates have behaved over the past month or so should be causing serious concern that the country has gotten itself into a fix that can't be remedied in any conventional way. Since the Federal Reserve reduced interest rates in early June, the actual rates that people and businesses have to pay to borrow money have soared like a rocket. The interest rate on 30-year government bonds - which are no longer issued by Washington but still trade - has risen from around 4.20 percent to about 5.50 percent. That has caused 30-year mortgages, for instance, to rise from an average in the very low 5 percent area to over 6 percent.

But something else is even more tricky: Interest rates could be rising because of the perception that the economy is improving. What if rates are rising and the economy really isn't improving? Then you have what I'd call a lose/lose situation - a glass that's three-quarters empty. So, is the economy improving? Some of the government's statistics say it is. But those stats could be misleading. Last Friday, for instance, Washington reported that the economy shed 44,000 jobs in July. The employment situation was so bad, in fact, that people stopped looking for work and a statistical fluke caused the unemployment rate to drop. But looking behind the numbers shows an even worse situation. After revisions, there were actually 92,000 fewer jobs available in the economy in July - not simply the 44,000 lost. That's a massive number of missing jobs in just one month.

The optimists look at the nation's gross domestic product, which grew at a reasonable 2.4 percent in the second quarter. But it didn't really. Nobody was expecting that 2.4 percent, and for good reason. The government achieved that surprising figure by sharply reducing the amount of inflation it saw in the quarter. Did you see inflation go down from an annual rate of 2.4 percent to just 1 percent, like Washington did? Without that change, the GDP would have been a paltry 1 percent annual growth. And that growth includes the massive military spending increase related to the war in Iraq.


Black Blade: Bingo! As I have been saying. You have to look behind the numbers and not the "statistical fluff" of data massage and filtering. I can just imagine the boss (say some political "big wig") coming to the BLS offices and asking a group of government statisticians how the economy was doing that week/month. The typical response could be "what do you want it to be?" The point I am making is that you should never trust the numbers on the surface because data manipulation and story spin is rampant in Washington and Wall Street. These trolls do not live on Main Street with "normal" people.

"There are lies, damned lies and, statistics"

Lord North (I think)

BB, do you feel the GNMA funds are in the same danger as Fannie and Freddie,with the GNMA bonds principle is guaranteed by the Fed Govt. I know its still paper but is there more security with GNMA.21

Cavan Man - I think that was Samuel Clemmons (Mark Twain).

21mabry - Freddie Mac and Fannie Mae are not government backed.

- Black Blade

Boilermaker by trade (retired B&W) and education (Purdue). Beer and cheese, no whiskey. Currently getting educated at the Forum to help me through the coming storm. You are one smart young man to be here. This place is "priceless".
Cheers,
Boilermaker

.....the bleeding shall begin in earnest.

Will we test the 1995 $420 high by the end of the year? What a lovely Christmas gift!

I hope someday we can get the full, unedited thesauras of the Wall Street gang that you degrade. It is one of the 'pleasures' of the internet.

You mentioned 'trolls' tonight and I love the 'carnival barkers'. There are the 'pimps' and the 'whores' (although that one is seldom used) and a host of others.

Oh what the heck, what's the chance of getting a complete list gathered up? When the BIG MELTDOWN hits your messages will be saved as evidence that 'we were trying to tell them'!

You are going to be famous.

Anyone notice the serious beating taken by the markets today.

On a sadder note hope everyone has seen the bomb news in Jakarta. This is a terrorist plot, no need to call it anything less.

The planet sheds a tear again.

Anglogold ceo has a short interview up on robtv.He speaks of aquisitions they are making says they are reducing hedges,he sees good upside potential for gold price,he also speaks about some exploritory properties in asia with mongolia as place that may offer potential in gold mining.Thnx for kind words Boilermaker.21

On July 31, I posted a comment about the fact that if a European entity comes out with a .9999 pure half ounce gold coin with a value of 100 Euros marked on it, POG could numerically be estimated to be worth $614. This may be a nominal value. But now if platinum is at a 2 to 1 ratio with gold, and if its usual such ratio is 1.1 to 1, then POG could numerically be estimated to be worth $637. While the valuations of 614 and 637 are not identical, they are significantly within the same general amplitude of range when it comes to POG, particularly when it is considered that such abstractions as these tend to be fluid and not inflexible in markets generally. This might help to explain why the number of open contracts in December 2003 gold stands this evening at 126,701, why public mention of gold as a hedge against changes related to bonds and interest rates has become more outspoken in recent weeks (this is my subjective opinion), and why a number of articles have appeared in recent days illustrating what appears to be the increasingly anxious attitude on the part of gold mining concerns in various places around the world. An appreciation -by professional interested parties in financial businesses- of such a possible new range for POG as this one, would also fit rather nicely into the emotional environment which has begun to come into view, namely, that the edges of seats are presently getting more use. In my not-very-humble-but-also-not-invariably-incorrect opinion, POG has been acting in some interesting ways for around a couple of months now, which are indicating, I think, that there is a lot of power behind it, and to me it looks like a bull pawing the ground and getting ready to go.

Close!From Publishers Weekly
Who really said, "There are lies, damned lies, and statistics" Mark Twain or Benjamin Disraeli? Best, professor of sociology at the University of Delaware and author of several books, including Random Violence, settles the question once and for all: Disraeli (whom Twain credits for his use of the remark in his autobiography).
(excerpted from a book review utilizing part of the quote in the book's title)

http://www.bloomberg.com/news/markets/bonds.htmlSnip:
"U.S. five- and 10-year Treasuries fell in Asian trading before the government's $18 billion sales of each of those maturities today and tomorrow, after a three-year debt auction yesterday showed less demand than at previous sales. The $24 billion of three-years drew bids worth 1.32 times the amount of debt offered, the lowest for that maturity since at least 1983, according to Stone & McCarthy Research Associates. The five- and 10-year note auctions ``will be bad as well,'' said Abel Thio, a bond trader in Singapore at Barclays Capital, one of the 22 firms that deal directly with the Federal Reserve and that are required to bid at auctions. ``Nobody is interested in Treasuries -- there is too much supply.''

Waverider: I wonder how many are sweating the next few days and losing sleep tonight...not me!

http://www.jsmineset.com/s/Home.aspSnip:
"You talk about putting your thumb followed by all your fingers in the dyke followed by all your toes and nose and guess what? It is leaking in 7,394 more places all at once.

We will be kind by again posing the question. You have the awful bad luck of being appointed Secretary of the US Treasury which means you are the "US Chief Bond Salesperson" at the worst possible time in history. You have at your call and command over USD$30 billions with which you can legally and ethically fiddle with any market in the world you feel like. You are in charge of selling a mountain of bonds and the bond market isn't just critically weak, it is bleeding all over the place. What do you do? Well that is easy. You play every market to make it through this huge sale of your bonds. You sell gold and buy the index futures. You start two weeks ahead of time. But that "Swap Spread" is blaring to the financial world over the "Financial Mukluk Wireless" that the bond market is in as much and more trouble as it was when LTCM exploded. You've got the short end off today but the pressure on the bond market in the ten and thirty yield is getting too much even for stabilization to hide. You have no choice. You tell your brokers to pull back, and guessed what? The DYKE BREAKS....

But not to worry, the talking heads on financial TV are super bullish. Damn, that certainly shows consistency."

Waverider: GREAT read tonight from Sinclair - not to be missed!

Me neither.

(I was referring to not losing sleep, which was the last line in your post a couple of posts down.)

...Bonsoir Sir and Golden Dreams!

Silvercollector �

It is difficult for anyone to have much respect for the Wall Street crowd that we see on financial media infomercials like CNBC, CNNfn and Bloomberg. These show hosts ("carnival barkers") rarely do anything but spin a great tale of "economic recovery" or "improved outlook". In the early days (1970's) when CNBC was FNN, they used to have well balanced programming addressing all sides of the economy. They even used to have a precious metals show on Thursday evenings called "The Silver Baron" with Eliot Pearson and Bill Griffith (who is still with CNBC as is Ron Insana). But I digress.

Now these shows have degraded into "simpleton economics" shows designed to sell stocks (much like late night showings of Ron Popiel selling the "pocket fisherman" of some other useless gadget). Even with horrible economic data and terrible earnings profiles you will see some corporate CEO in a choreographed interview tell the viewer that his company (usually with a stratospheric PE ratio, deeply in debt, declining earnings even with "cost-cutting" and falling revenues) whine on about how his company's shares are somehow "cheap", terribly "undervalued" and that the investor should buy now because he "feels" it will only get better.

Other "guests" such as some investment house analyst ("pimp") will tell the viewer how some company or sector will increase earnings by a wide margin "forever". Never mind that these "cockroaches" have been found to email their colleagues about how they are giving "buy" ratings even as they themselves refer to the shares as "garbage" and apparently don't know how to issue a "sell" rating (Remember Citigroup's Jack Grubman or Merrill Lynch's Henry Blodgett?).

Then there are the market strategists ("Pied Pipers") like Abby Jo Cohen and Ralph Acampora. Who can forget the glorious market outlook with the DOW going to 17,000 even up to 34,000 in no time at all, and "it's different this time" as the stock market will rise forever because it's a "New Economy."? Whenever the market needed a lift out of a slump the media would trot out ole Abby Jo to reassure investors that they need not worry and she would confidently spew out another grand forecast for the market. As Jim Rogers would say: "Trees grow to the sky".

And who can forget the slate of "third string" brokers ("trolls") who would talk their book pumping the newest offering fresh from the boiler room. One look at the corporate balance sheet (if there was one) would scare off any investor who took the time to take a look. Unfortunately most investors ("Lemmings" or "sheep") would simply throw their hard earned retirement money into stocks of these companies on empty promises in a speculative stock market mania only to see their hopes and dreams crushed while these conmen collected hefty bonuses at their expense.

Then there are my favorites, the Wall Street, academic and government economists who couldn't find their --- with both hands. It has got so bad that even CNBC's Mark Haines derides them when economic data is released because their predictions are usually wrong. Recently I saw one such economist, CNBC's very own Larry Kudlow, get absolutely horrified when some very grim monthly unemployment data was released only to come back on after the commercial break to spin a tall tale about how now that many more people were "looking" for work was actually a "good" sign that the economy was improving. Yeah, he went from being very depressed and glum and in the space of 60 seconds he was all smiles and giddy with a new bullish assessment based on the suddenly "good data".

Anyway, there are a lot of descriptions (and they are all interchangeable) that can be used to describe these con men and flimflam artists. I just can't think of them all right now. I just watch for "entertainment" value now as I see through their game. Apparently more and more individual "investors" see through them too. CNBC's ratings have fallen off a cliff and a good deal of the advertising is taken up by "public service announcements" in place of paying customers. I have seen more of Ed McMahon pushing "Neighborhood Watch" than I remember seeing him on the old Johnny Carson show. Then there is the young kid with the dark brown hair with some dyed blond tied into a pony tale and a variety of body piercings in the "Anti-Drug" public service announcement (obviously his problems go way beyond drugs � self mutilation being one). Anyway you get my point.


Cavan Man �

Yeah, I seem to recall that being attributed to Mark Twain from a book I used to have that had a variety of his writings and sayings. Whether he actually said them or came up with them I can't say. Unfortunately I don't have the book with (might be in storage). He was a man before his time and I can only imagine what he would be writing now. I don't think he would be very flattering to a lot of people in the public eye. He was said to be a misanthrope.


- Black Blade

...bondman sez; The Dream Team will have to raise rates by year-end or they risk 7%. The best thing they can do is begin to talk about raising rates.
See, what many don't understand, is that as McTeer said clearly, "The fed is on hold, with the throttle down to the floor".

...Merrill Lynch senior economist Martin Mauro thinks economic forces will reassert themselves at some point as convexity selling runs out of steam.
"As the economic data begin to depict a moderately growing economy and convexity selling runs its course, the (bond) market will probably begin to react to the economy again," he said.
What does that mean for the dollar?
**Ruskin believes that the link between higher Treasuries yield and a strong dollar could resurface.** He says much of the bond market's detachment from economic data has played itself out.
Sooner than later, he believes, the bond market will start reacting to positive U.S. data again.

**So I suppose the "could resurface" mentioned above tells a lot more than I can understand. Still looking to see if the Sinclair angle has merit. Is it just a financially painful but survivable "convexity selling" issue, or something as bad as the some say, a corrosive derivitive
fracture that will kill us.

http://www.financialsense.com/Market/wrapup.htm
Snippit:

It comes as no surprise to me that stocks are taking a hit just when the economy is supposedly improving. It's easy for the Wall Street Spinsters to say that bond prices are getting killed because the economy is improving, but where is the follow-through from stocks? When the government needs to borrow $60 billion in one week, everything else must be pushed to the back burner until the debt is sold. Last Friday I stated that the markets were being conditioned to buy Treasury paper. Bonds were already oversold (we thought) to make the yields more attractive for this weeks� auction, and stocks have gotten ahead of themselves, so money could easily come out of stocks to buy the Treasury paper. The coverage on the sale of the 3-year notes was thin today. We will just have to watch and see how things go tomorrow and Thursday as they auction the rest of the debt paper.

I have increased my short positions for the overall stock market and am patiently waiting to find the near-term bottom for bonds to play the bounce. Precious metals are in a holding pattern until the debt is sold. In fact, gold investors were put on notice last Friday in the late-day take-down right before the close. Silver investors got a hand slap today with silver losing ground, but the stocks held up well. I read the metal bashing as someone saying, "Don't even think of buying gold and silver until all the debt is sold. We can't let the metals rise because it will show weakness in our paper." Everyone will know the precious metals bull market is real when the price of the metals goes up in all currencies. With the current stresses on the global monetary system, precious metals are a very nice way to feel some security in the preservation of wealth.


Black Blade: Yes indeed. I had mentioned last week that I thought that the over supply of government debt (with much more to come) would be difficult to sell without foreign buyers. This is just the first wave of auctions too. With so much debt to sell will their be enough buyers without the Federal Reserve having to resort to "nonconventional means" such as buying the debt themselves? Maybe the "nonconventional means" talk was to prepare the investment community for that very possibility. Who knows? What is certain is that the US dollar must weaken against other currencies or else the notion of "economic recovery" will be shelved. Export driven economies like Japan and China will step up to the plate to buy a good amount of this debt in the continuing "competitive currency devaluation" scheme (aka "Currency War"). Japan is especially vulnerable as they are without natural resources and must buy material abroad to assemble into trinkets for sale in increasingly competitive markets as the shrinking economic pie gets smaller so to speak. Meanwhile precious metals are selling at a bargain as the dollar bounces around at the mercy of currency intervention and slack demand. It's only a matter of time before all hell breaks loose.

I throw this out tonight just to add a twist to all the crazy markets of late. The planet Mars will soon be closer to the earth than in over 60,000 years. (August 27 I think?)
The red planet has often been associated with "war" and upheaval of varied sorts. A little known fact is Mars has two moons. The english translations of thier names is "Fear" and "Panic". Makes you kinda wonder about all those "signs in the heavens". Are we having fun yet?
I see Spot is up and about this evening looking for a midnight snack at the Sushi Bar. OK by me!

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20030802/UREPOM-6//?query=gold
Snippit:

Washington -- Gold-coloured bars seized by U.S. forces in Iraq appear to be melted-down shell casings made mostly of copper, rather than gold, the White House said in a report obtained by media yesterday. The U.S. military announced the discovery of truckloads of gold-coloured bars in May. Believing it was real gold, one haul was estimated to be worth as much as $500-million (U.S.).

Black Blade: Gets more curious all the time. A lot of opportunity in wartime. No word yet on the latest "gold" seizure though.

The days of steam locomotives has long passed,but the memories persist. Great Monsters of Steel and Wheels, having the power to move massive amounts of material across the land on rail. They required frequent attention by the Engineer. Oiling and constant inspection of the drive mechanism. Maintaining the water level and an even coal bed in the firebox for a proper steam pressure.
My Fireman has stoked the firebox and my pressure gage is at operating pressure. I pull the landyard and the whistle comes to life, signaling the Conductor to sing out his Time Honored Call. ALL ON BOARD! The last few passengers scurry to board this train. I look back from the cab and see the Conductors signal. I take the seat of control and give another blast of the whistle. The Fireman makes one more check of the firebox and I the steam pressure gage.
I look forward for a clear track, crack the throttle and release the brake.
The engine jerks forward and the strain of the wheels upon the rail have a momentary slip before they grip the rails again. The cars behind begin to more as the weight is overcome by brute force. But forward we move. Slowly at first, but as each explusion of steam engulfs the engine, we gain speed. We move from the station platform. Through the yard navigating the switches, untill finally we are on track to our destination. All that is left is to open the throttle as we approach the many crossings of life and sound the Whistle of Success.
WWWWWWWOOOOOOOOOOOO, WWOOOOOOOOOOOOOOOOOOOOOOO.
All On Board the Golden Zephyr.
Slingshot------------------------<>

"Either, we close down the government due to lack of funding or the Fed monetizes the debt -- prints money -- in order to keep the government in operation. If there's another, I'd like to hear what it might be."--MK

Well,offering more interest is also an option in my view,keeping in mind saving accounts are at 1% or so.But higher interest rates seem to be poison for the financial industry.

(writing from Basel,had yesterday 40�!)

If the govt. can't sell bonds to raise funding, they could always go to the IMF for a nice big loan. Isn't that what Argentina did before their currency collapsed?

How can the Reserve Currency, Lender/Buyer of Last Resort go out with a begging bowl? That would surely make it clear to ALL that "The End" as surely come.

I'm sure if the govt. had to go to the IMF, they would spin the information through the media to show how it was a good thing, and that it will hasten the non-existent 2nd half recovery!

Anyway, I wasn't really being serious about going to the IMF, and I better not give anyone any ideas because I'm sure the govt. would probably try it if they had to.

http://www.iht.com/articles/105325.htmland more on hedonic reporting on the economy. Good and honest essay by Paul Krugmann(NYT), reprintred IHT.

Does anyone still believe we have free markets anywhere? cb2

http://www.nationalpost.com/financialpost/story.html?id=E5BCF033-6460-4788-8018-342D6F11DABACash Costs of Gold Miners have risen dramatically the article states. Barrick and Placer Doom have been cited as the main victims, while Newmont has had a great quarter.

The only reason for the drag on earnings are their underwater hedge positions - surprise. You'll never hear reality in the main stream press - amazing. cb2

http://www.usagold.com/gold-coins.html

Exelon Corp. (EXC) said it will eliminate 1,200 jobs by 2004 and another 700 positions by 2006 as part of a cost-cutting plan the utility company has labeled "The Exelon Way."

In msg.# 106749 yesterday (8/5) you said "the Fed added $5.5 billion" but you didn't mention the fact that the $5.5 bil. involved a one-day repo that replaced an 8/4 one-day repo of $5.25 bil. that matured yesterday. Today (8/6) there's another one-day repo of $5.25 bil. replacing yesterday's $5.5 bil. repo that matured today. Your way of reporting these daily fine-tuning operations gives the false impression that day after day the Fed is adding vast amounts of Treasury and agency securities to its holdings.

Yesterday, you may recall, the Federal Reserve added $5.5 billion (O/N RP) largely at 0.95 percent as propositions collateralized by Treasuries were submitted between 0.90 and 0.96 percent (below the FOMC target and thus seeming to provide no impetus for Fed intervention).

Today, we see more of the same. Propositions collateralized by Treasury securities were submitted for the Fed's consideration between 0.83 and 0.91 percent.

The Fed took action at 0.91 percent, tendering $5.129 billion in overnight repos. (The Fed rounded out today's add at $5.5 billion with $121 million collateralized by agencies at .95%.)

Lest the deflation boogey-man frighten us unduly, representatives of the Federal Reserve have informed us there is no meaningful limit to their power to add money. And if you're worried about such things as the practicality of "pushing on a string", let me remind you that we have a huge governmental system that has demonstrated its ability and willingness to act as "borrower and spender of last resort", effectively flying the helicopters from which the money falls. (Double meaning intended on "falls" (gravity, depreciation).)

R.

I'm glad to see that my messages have prompted you to identify the recent Fed adds as overnight repos. I know you meant to say that agencies rounded out today's fine-tuning add to $5.25 bil., rather than to $5.5 bil., and, of course, that involves a reduction of $250 mil. in the Fed's holdings.

http://www.zealllc.com/2003/rvix2.htmThe SM may be holding up pretty well today, but the VIX has jumped from under 20 to over 25 in the last week. This is the highest since April, and is a possible sign that we are past the top in the market. Adam Hamilton has written a series of articles about the the VIX (S&P500 volatility) and VXN (Nasdaq volatility) of which the attached link is the latest.
It's just like you are at that last point at the top of the rollercoaster. The eerie silence between the chain lift stopping and the screaming as gravity starts to make itself felt .....

As I explained for you previously (last Thursday?), any responsible reader would not receive a false impression, as you say, that "day after day the Fed is adding vast amounts of Treasury and agency securities to its holdings" because each open market operation that I cite clearly indicates the duration of that particular add (overnight, 3-day, 5-day, etc.)

For example, anyone who read about yesterday's overnight repo of $5.5 billion will not today harbor any bogus notion that it is still on the books, having thus reached its maturity with the passing of the intervening 24 hours. I'm sorry, but I can't quite see how this is a problem for you -- feel free to email and elaborate if you think it may help us reach an understanding.

I might also suggest that if you try looking beyond your focus on the net position of the overlapping waxing and waning of these various open market operations, you will see that I am often times making a broader point about monetary policy.

Look at today's post (#: 106788) as a prime example:

As I expect most readers will see, the day's repo ops information was merely a canvas in bringing forth the greater picture that the Federal Reserve's NY trading desk has been undercutting the FOMC's 1.0 percent directive. In detailing the relatively low range of bids, it also gave insight into the (ample) supply of cash available in the commercial market for overnight funds.

Your own insights and comments on those elements would likely be most beneficial to our fellow readers.

R.

http://focus.comdirect.co.uk/en/detail/_pages/charts/main.html?sSymbol=ZBU3.CBT&sTimeframe=iD&useSettings=0&showSettings=&sid=&hiddenTimeFrame=1&sOrdType=price&sScale=linear&sMarket=ZBU3.CBT&iType=1&sAv1=na&sAvfree1=&sAv2=200&sAv2free2=&sAv2count=1&iInd0=na&sBench1=na&sBenchcount=1&sBench2=&sBench2count=1&showBenchmarkSearch=&iInd1=2&iInd2=na&iIndcount=1&sSettings=naI guess that the powers that be were not happy with the treasury auction result yesterday. Anyone else think that this is monetization to make the auction today look better?

Got Physical Gold?

With 3-month T-bills yielding 0.82% today, are you suggesting that the Fed should reward the dealers with an overnight rate of 1.00%? The desk is not seeking to undercut a directive. Its daily operations are undertaken with the primary purpose of holding Total Reserves at a consistent level relative to Required Reserves (see the Fed balance sheet published each Thursday). As I've pointed out before, the biggest factor requiring the Fed's gradual acquisition of securities during the course of each year is primarily a response to the drain of reserves resulting from the gradual increase of Currency in Circuation that occurs each year, an increase that results from decisions made by the public, not by the Fed.

http://www.usagold.com/wgc.htmlsee second chart from top

WGC: "Note the rapid turnaround in the ten-year bond yield over the past month. Note also how the gold:bond yield lead:lag relationship has broken down."

Nice chart, but if you can spot anything that passes for an actual "relationship" (as in, "correlation") at a period of time here prior to breaking down, you have a gift that I do not possess.

R.

You ask, "are you suggesting that the Fed should reward the dealers with an overnight rate of 1.00%?"

No, that is not what I am saying. That's not the point I'm making. It cuts both ways. If funds in the market are softer than the FOMC directive, an observer might naturally expect that the Fed's trading desk would either take no action at all, or else would engage in a REVERSE repurchase agreement to temporarily absorb some of the funds. But that is not what they did. They contributed more funds at a rate softer than the FOMC target.

Please reconcile this following item regarding your rationale with respect to reserve requirements: if reserve maintenance were at issue, why do you think (or how do you explain) that a shortage would not be putting upward pressure on the fed funds market, and why is the Fed not letting the market find a clearing rate up to the FOMC target level?

R.

Now you're suggesting that when short-term market rates are below the fed funds rate, the Fed should do reverse repos to absorb the market-place liquidity that is causing those low rates. Even if that were possible, that's not the goal of the daily operations. Fed policy obviously has been aiming at holding Excess Reserves (Total Reserves minus Required Reserves) at about $1.5-1.6 billion. Required Reserves (which today apply to a very limited portion of the money supply) don't change a lot from week to week but in the absence of the daily operations, Total Reserves, and thus Excess Reserves, would fluctuate wildly. For example, in connection with major holdidays, Currency in Circulation (CIC) typically shows (through the choice of the public) a substantial, though temporary, rise -- and since CIC is always the largest potential absorber of Reserves, if the Fed did not offset that drain through a matching, though temporary, increase in its securities holdings, Total Reserves would plunge and Excess Reserves would become substantially negative.

You can track the outstanding amount of FED repo's here. It nets the pumps against the drains automatically.

http://www.bullandbearwise.com/FOMOOutChart.asp

The demand for money from consumer, corporate, and government borrowing is at a breathtaking pace. Most recently REFI cash outs have collapsed, but purchases
remain high, and of course huge amounts of corporate and
government borrowing. During the depression of the 30's
this same thing happened, in fact in 1932 borrowing and rates spiked before plunging to new lows.

http://www.bullandbearwise.com/GoldChart.aspFederal_Reserves (08/06/03; 13:08:50MT - usagold.com msg#: 106798)
===
Thanks for the LINK ! Lots of interesting "stuff" there !!
I think that I like to compare all those charts against each other and the one that looks BEST to me is at the above link !
<;-)

than yesterdays 3 year's notes, apparently.

The yield was just above 3.30 and the cover ratio 2.48 vs the dismal 1.32 of yesterday.

Wow, what a great performance ... cb2

Asks Eric Fry from the Daily Reckoning.

Substantiating his thesis is the fact that 23% of the broader indices are compiled by financials. Not even counting covert financials like GM, Ford or GE. Wouldn't it have been for their financial divisions their earnings may well have been negative...

Just let us hear Eric's summary:
But when interest rates are rising, the rules change.
Finance profits evaporate and manufacturing comes back into
fashion. Neither the struggling U.S. economy, nor the
richly valued U.S. stock market is ready to play by the new
rules.
Seems to me to portend another 2nd. half of dashed hopes for a recovery, as the only positives were financials. Ah, and almost forgot defense spending by who? You, the tax payer ... Oh, well, why don't you do yourself a favor and spend some green paper on real value.
Be smart, go gold, instead of smart bombs - cb2

http://cbs.marketwatch.com/news/story.asp?guid=%7B1D5DB34F%2D650D%2D45A6%2DA2DF%2D40D90C636C83%7D&siteid=mktwover 5 years maturity, must have had some supra-national qualities.

After the longest "bull" bond charade in history the direction is a given. And so is the direction of a massively bankrupt US dollar reserve system.

Not many ways to escape the 'Tsunami' ... 'cept' gold -cb2

PS: Sorry to clutter the bandwidth with trivia - not only, but ... particular today!

www.usatoday.com/money/in...tics_x.htm
Snippit:

JANESVILLE, Wis. � Freedom Plastics President Steve Scaccia doesn't mince words when he discusses what high natural gas prices are doing to his PVC-pipe-producing firm. "We're getting creamed," he says. The price of natural gas, the biggest cost in PVC plastic production, is up 60% from a year ago and until recently was even higher. At the same time, lower demand for PVC pipes, which are used to transport water and waste, has led to a huge price decline. PVC prices received by Freedom Plastics have fallen more than 30% the past four months. The result: a squeeze that has made Freedom Plastics worse than unprofitable. It's losing money every day.

High natural gas prices are more than a costly inconvenience for homeowners. They threaten to shut down entire industries that heavily depend on the energy source as a product ingredient. Some fear jobs in those industries will move overseas, where natural gas prices are much lower. "It is crushing the competitiveness" of U.S. firms, American Chemistry Council President Greg Lebedev says. U.S. companies are "going to leave, not because they want to, but because they have to," he says. "Once they do, they will not come back, and neither will the jobs."

The American Chemistry Council estimates that 1 million people work directly in the chemical industry and an additional 5 million work in industries tied to chemical production. Natural gas is an important ingredient for products made across the country, including paint, fertilizer, antifreeze, dyes, photographic film, medicines and explosives. For many products, natural gas accounts for the majority of the cost of production.

Black Blade: Higher NatGas prices lead to necessary demand destruction to get us through this period of tight supply. We are extremely fortunately to have economic recession as it has been useful in helping stabilize the petroleum supply not to mention cooperative summer temps. The situation will not improve much either as energy executives have pointed out recently. Earlier today Devon Energy CEO Nichols on CNBC said the biggest constraint on increasing NatGas production is that prime target areas remain off-limits and without access the NatGas supply will worsen in coming months. Meanwhile the BLM and EPA continue to deny drilling permits and infrastructure improvement contributing to diminishing NatGas supply and distribution. Meanwhile higher energy costs drop straight to the corporate bottom line pressuring profit margins. Without an effective energy policy many industries will have to be "sacrificed" so others may survive.

http://www.usatoday.com/money/economy/employment/2003-08-05-challenger_x.htm
Snippit:

NEW YORK (Reuters) � The number of job cuts announced by U.S. employers surged 43% in July after a two-month decline, a report said Tuesday, suggesting a rebound in the job market may not happen until the end of the year. Planned layoffs at U.S. firms shot up to 85,117 in July from 59,715 in June, job placement firm Challenger Gray & Christmas said. Job cuts so far in 2003 total 715,649, only 12% lower than in the same period last year. The report said job hunters can expect an average of 20 weeks to find a job that may not match their last salary. According to the report, the consumer goods industry announced the most layoffs last month.

Black Blade: The "jobless recovery" marches on as the "Bone Pile" grows. As the Wall Street drones say: "it's only a lagging indicator". ;-)

Hopefully some of you who have lived and traded other gold and silver bull markets can help me out.Is the relationship between the metal and the miners still what it was in the past.From following both for the past year its confusing to me.You can look at mining stocks during the day and not be able to tell what the metals doing and vice versa.There have been many days when I have seen the metal rise and thought man the miners must be doing well,then I look and they are not and vice versa.Because of manipulation and hedging has there traditional relationship been altered.In my unevolved mind they should be joined at the hip and move in lock step.21 P.S. with the learned minds on this board I wonder if anyone has ever come across any good books on post Napoleon time period dealing with german unification and Italian unification up until the time of Bismark.21

I am trying to remeber my readings.Did Another and FOA consider good unhedged miners to be paper that would just burn?If they did I guess I answered my own question but before paper burns and the full extent of the problem is common knowlege will the miners move like tech did in the 1990s.Physical possesion is the right choice no doubt but the mining stocks have something to tell us IMHO.21

I was reading John Kenneth Galbreaths work on the great depression,in it he points out that it is a misconception that easy credit and lax rules concerning stock trading resulted in the great depression.He points out there were many times before that were credit was easier to get and stock trading was far more less restricted.One thing that came to my mind while reading these words was if they are true we need to look to the Federal Reserve and its role as this was the first big financial crisis after its founding.Just a thought.21

My general recollection is that FOA put investments in unhedged miners on a lower tier than physical gold because, in the scenario envisioned that would propell gold to a new level of prominence and strategic importance, the miners -- unable to relocate their in-ground reserves and point of operations -- are easily held captive by the political powers and voting public.

Investments in mining corporations may severely underperform your own assets of free gold due to special point source taxation of a nationally strategic asset, and may further be limited by government mandated production quotas (sub-capacity output).

The government will always ensure its own interests and financial needs are met, and a hole in the ground "exploited by fat cats extracting the Nation's gold" would be an easy political sell and a sitting duck compared to all else.

This might not be precisely FOA's take, but I think it is close, and at any rate, the thought definitely resonates in my own mind and dictates my investment decisions in this area; that is, precious physical instead of corporate assets. After all, when it comes to portfolio diversification, corporate mining stock is probably just another certificate among your several corporate investments and other not-immediately tangible assets that you need to balance with something suitably outside of that tight realm. For example, after 9-11, gold mining stocks weren't trading on the NYSE along with everything else that wasn't trading due to the shut-down of the Stock Exchange. The market in physical gold, however, continued trading around the world without missing a beat.

Bottom line: mining stocks may be part of a broad investment portfolio, but they do not truly provide the full-bodied diversification that every portfolio should have.

If you call the staff at Centennial, they can help talk over a strategy that meshes with your needs, your concerns, and your lifestyle.

R.

http://nachrichten.boerse.de/anzeige.php3?id=688a8578SNIPS � Anyone in a translation mood? (I overlooked perhaps even more important paragraphs)
...
Ich verfolge manchmal die Diskussionen in einem Internetboard, in dem tats�chlich einige Verr�ckte glauben, das Silber werde einmal in nicht allzu ferner Zukunft den neuen Standard unseres W�hrungssystems abgeben.
...
Doch Silber als neuer W�hrungsstandard? Manchmal denke ich daran, wenn ich an das Scheitern des Goldstandards und seine Verursachung der Weltwirtschaftskrise der Drei�iger Jahre denke. Gold ist einfach zu wenig vorhanden, um die gigantischen Volkswirtschaften der Gegenwart �fl�ssig" zu halten. Und Silber?
...
Und noch etwas: Sollte es tats�chlich irgendwo zu einem Knall kommen, wird der Edelmetallbesitz mit an Sicherheit grenzender Wahrscheinlichkeit verboten werden. Wer dann trotzdem Edelmetalle weiterhin h�lt, wird entweder ein Nomadenleben f�hren m�ssen oder aber gesellschaftlich stigmatisiert werden. Wenn es also wirklich knallt, ist sowieso Sense. Doch weil alle das wissen, wird es nicht dazu kommen. Und der gesellschaftliche Konsens, oder wie immer man dann die zu treffenden Entscheidungen nennen wird, das ist mein fester Glaube, wird den Metallhortern keine Chance lassen. Denn wir leben in sozialistischen Zeiten, das sollte man niemals vergessen. Die Superschlauen werden daher nicht unbedingt einmal die Ersten sein.

From archives.
Very nice read posted by : The Traveler (10/25/00;
Good reflection why things are today the way they are.





The Traveler (10/25/00; 21:04:54MT - usagold.com msg#: 39955)
@ Rossl, Nickel62, Galearis and others

Greetings and warm regards to all.

Before I respond to the comments of our esteemed Trail Guide made @ 39784, I believe that our august Forum would best be serve by some preparatory remarks. This will require me to glide down from
30,000 feet to 10,000 feet and circle for a while. Hope I don't run out of fuel. Tonight, a lesson on the mechanics of trade flow or how the US$ moves around the world.

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

I want to import casing and tubing for my 100 well drilling program in South Louisiana. I send out RFPs to a dozen steel mills located domestically and around the world giving each the footage, diameter,
strength and other specs of the tubing and casing that I want as well as a request for the bid price to be quoted FOB New Orleans in US$ and in their local currency.

When my deadline is up, I open the bids and see that a steel mill in France can meet my specs and is the lowest bidder at a price of US$10 million or 12 million Euros. For a variety of reasons, I choose to
pay in US$ once the pipe hits the docks in New Orleans (perhaps I think the US$ will slip against the Euro and I will profit. My bank is more than willing to arrange a FOREX transaction and buy E12 million
for me now if I don't want the exchange risk.) Thus I contract with the mill and post my letter of credit for US$10 million. The pipe arrives a month later and after inspecting it and counting it to verify that the
cargo conforms to the terms of our contract and the LOC, I accept the cargo. The Whitney Bank then wires US$10 million to the Paris bank of the mill. DIGITAL US$ arrive in Paris and the transaction is
complete.

From a microeconomic perspective, this transaction has widened the trade deficit of the USA (dollars went overseas). The final net TRADE deficit or surplus will be settled from millions of other import and
export transactions made with many countries (the macro perspective) and reported a month or so later by the financial press. This is the $30 billion monthly figure that we now read is the USA's net TRADE
deficit.

A side note. The USA runs net surpluses with some countries � Mexico, while it runs net trade deficits with other countries - Saudi Arabia for its oil. It is the deficits that get the most press and political
grandstanding � Japan in the 1980's (auto import restrictions, tariffs, etc.), China today (WTO membership, calls for market liberalization so that the USA can export more to them).

Roughly 30% of the USA's total import bill is for foreign oil. At $30 net, the daily import of 10 million barrels causes a $9 billion monthly charge to the TRADE account. Higher oil prices will increase the
trade deficit while lower prices will shrink it. This point will have profound consequences on America when the US$ looses its reserve currency status. Call it the Achilles heel of a society that has been spoiled
and enriched by cheap energy and loose credit.

Now the mill must decide what to do with its US$10 million. If the mill is flush with Euros, then it calls the trading desk of its Paris bank and instructs it to buy a US$10 million US Gov't note maturing in 5-01.
The bank calls its branch in NYC (or its correspondent bank � say Chase) and orders the trade. When confirmed, the Paris bank wires US$10 million DIGITAL dollars to its NYC branch so that the NYC
branch can pay the seller of the note and take delivery of that note. The owner of that UST note (paper claim) is the French steel mill. It invested a portion of its equity/ wealth (not just profit) in the USA.

The repatriation (return) of those DIGITAL US$ is captured in the CAPITAL account flows that are less reported or understood. At the end of the day, the net trade account and the net capital account
MUST balance and the DIGITAL dollars MUST eventually return to the USA. (Some minor leakage does occur, however). As we shall see below, there are many ways to balance the trade and capital
accounts.

If the mill decides to convert the US$ into Euros so that it can pay its local vendors, make payroll, and pay taxes and dividends, then it instructs the Paris bank to do a FOREX transaction. The bank does one
for its own account and the mill's bank account is credited with E12 million less a fee. Now the bank is holding the US$. It checks its cash flow needs and decides that local needs are covered.

For the US$10 million, it now has three options. It can buy a US note in the same manner as described above for its own account, it can loan the US$ to a French or German client wanting to buy a private or
public US company or asset, or if all external needs are satisfied, it can send the US$ to the Central Bank and have E12 million credited to its account at the CB.

The Paris bank decides to send the US$ to the Central Bank. Historically, all Central banks shied away from currency risk and so after forecasting its reserve currency needs for payment of imported oil and
other imported commodities (copper, wheat, etc), it simply sent the unneeded US$ back to the FED/Treasury in exchange for an equivalent amount of its own currency.

Oh, you have no Euros to swap for your US$, Mr. Secretary? Then send us your gold bullion. Oh, you closed the window in 1971. Then how about settling with SDRs (special drawing rights). Hold it, we
are full up on those too. Since you can't settle, we will go into the open market and sell your US$ at any price needed to clear the trade. Currency devaluation follows if after the net�net trading of all private
and central bank transactions more US$ still need to be sold. Alternatively, currency appreciation occurs if more US$ are wanted than are available. This is basic supply and demand balancing and price
discovery.

$$$$$$$$$$$$$$$$$$$$$$$$$$

In 1995, when the dollar dropped rapidly to 80 yen and to 1.2 Swiss francs because the supply of digital dollars exceeded the demand for digital dollars and thus a lower exchange rate (equilibrium price) was
needed to clear the FOREX market, Rubin created additional demand for the US$. He offered the Central Banks, effectively the holders of last resort, a deal they couldn't refuse. Call it the Rubin put. Buy
our 2-year notes instead of crushing the US$ in the FOREX markets and the USA will honor the following "make whole" promise��

The CBs reluctantly accepted the offer because an alternative reserve currency (the Euro) was not yet born much less crawling, much less walking, much less running. As ORO has commented, the ECB
needed to create a big Euro float. The absence of a functioning reserve currency would have collapsed worldwide trade and caused global financial turmoil if the CBs had laughed and gone home. Besides the
"make whole" promise though shaky beat acknowledging to their citizens that the world had transferred $5-$10 trillion dollars worth of its collective wealth (pipe, oil, wine, Toyotas, etc.) to the USA for near
worthless paper and America's protection from the evil empire.

Yes,the USA is the "mercenary" defense force of the Free World. Top cop on the block! It has bases everywhere including many in their homelands. Stop paying the mercenaries and what happens?

This is the unprecedented event that I referred to in my post @ 39771 - the CBs didn't swap US$ for their own currencies or gold or SDRs anymore. They bought US Treasury notes!!!! UST notes held in
custody at the NY FED for the account of foreign central banks tripled to almost $800 billion in just 5 years. Do CBs own any INTC or MSFT? No. They hold US$ denominated debt instruments (paper
claims) backed by the full faith and credit of the US Government which is further backed by its broad and getting broader taxing powers. It is paramount to understand that the USA borrows from foreigners
in its OWN CURRENCY. More on this huge settlement advantage soon.

The yen carry trade and the gold carry trade also implemented under Rubin created additional demand for the US$ so that further UST notes could be bought. This incremental demand shows itself in the
capital account as a surplus. If it is bigger than the net trade deficit, the dollar rises. If smaller, the US$ clears in FOREX transactions at a lower price. The net trade and net capital accounts are once again
balanced.

All this new demand for the US$ and UST notes created the Rubin/Clinton strong dollar AND lower yields on UST notes. All other private debt instruments are priced above the "risk free" UST note. Falling yields means cheaper borrowing costs and lower debt service requirements for all. Furthermore, the Capital Asset Pricing Model said earnings of traded companies are thus worth more due to a lower discount rate on their earning streams and BOOM the equity markets soared. This causes more CAPITAL account transactions into the US$ so that foreigners can get in on the action.

This virtuous cycle of prosperity was thus born because CBs took the currency risk that they had historically avoided. Why? The Rubin put or "make whole" provision was persuasive. Poor us when the virtuous cycle of prosperity reverses and turns into the vicious cycle of poverty. We will then start down the road to serfdom. Actually, Bubba deserves little blame � he was too busy behind close doors to supervise Rubin.

The rapid rise in energy prices this year is but another tool in the Treasury's tool box to create incremental demand for the US$ and avoid for now having to honor the put. Assume that the non-US, net importers of oil need 40 million barrels of oil each and every day to power their economies. Raise the price by $15 over a short period of time and an additional US$600 million DAILY must be kept at home
by central banks in order to pay for their respective imports of oil. Yes, this is inflationary to all countries, but does the USA want the flu or pneumonia?

Want a shred of proof? Recall that someone posted here recently documents of the LBJ Administration that showed that the US conspired with the British to disguise the net US trade deficit with Britain back
in the 1960's - when the gold standard was the disciplining force for international trade.

When France pays Kuwait for its latest tanker of oil, Kuwait must now decide what to do with the US$. It could deposit them in a NYC bank or buy a UST note or buy gold or buy fighters or pass it out to
its citizens so that they don't rebell. It too could sell in the FOREX market.

In 1991, did the Bush Administration encourage Iraq to invade Kuwait so that the demand for the US$ would increase from higher oil prices? Ask Ambassador Gladney. Was this also a market clearing
scheme perpetuated in order to partially repatriate billions in US$ accumulated by Saudi Arabia. Remember, it compensated (paid) the USA and other mercenaries to fight the Gulf War. See the positive
spike in 1991 on the chart of our trade deficit? In prior months, the deficit had been accelerating downward as trade deficits widened.

Are the current tensions in Palestine yet another tool in the USG's tool box used to create incrementally higher demand for the US$ and perhaps another market clearing scheme? I don't know, I'm just
speculating based upon prior history and USG behavior. Of course publicly, the USG sells two days worth of imports from the SPR to show Americans that Uncle Sam cares about them. If only oil was not
the blood of the modern way of life. It is at the heart of everything - trade, warfare, international intrigue and more.

See why the Euro had to be created? No foreigner wants to be abused forever. In time, it will sprint as the US$ stumbles. The Free Gold Market is said to be the mechanism that will prevent the same abuse
in the future by the Euro. The Euro will let gold find its own international clearing price and then mark-to-market its holdings of gold bullion. Too bad the Euro is only 15% backed by bullion.

In summary, I am confident that Trail Guide, ORO, Aristotle and other wise ones here would GENERALLY agree with the above to this point. A thousand minor technical differences wouldn't change the
thrust of this distilled analysis. The proper point of current debate then is: What happens to the USA's economy (and thus to many of you) when the Rubin "put" is called? How will the USG make holders of
its debt instruments whole? To inflate or to deflate, this is a choice that will create big winners and rabid losers. I'm on record @ 39771 with my viewpoint on who wins. Trail Guide has expressed his
viewpoint.

I'm running very low on fuel. I will return tomorrow with other lessons all must struggle to grasp before my response to Trail Guide can be posted.

Black Gold, Yellow Gold, the only wealth worth physically possessing!

Yes my friends, the fundamentals for GOLD appreciation can't get much better.

1) Rising US trade deficits pressuring the dollar.
2) Rising government deficits pressuring interest rates.
3) Foreign/Geopolitical problems on a broad scale (Iran, Iraq, NK, South Africa, South America), increasing risk of terror, many pots could boil.
4) Generally the gold producers are consolidating and holding off hedging.
5) Recently, a rapid decline in the value of bond investments held in foreign hands, if they continue to fall they may
be motivated to hold more gold reserves which are in fact are appreciating against the dollar. I believe this is a MAJOR FEAR RIGHT NOW.

Yes, excellent fundamentals.

TA is good too. WE have a triangular formation forming at the highs. Condensing nicely.

http://www.timesonline.co.uk/article/0,,748-769870,00.htmlLooks also very artistic.

http://biz.yahoo.com/prnews/030806/nyw161_1.htmlWho would have thought it!

The Invisible Hand (08/06/03; 17:34:29MT - usagold.com msg#: 106810)
Some thoughts on Silver � Verr�ckte Nomaden
http://nachrichten.boerse.de/anzeige.php3?id=688a8578
SNIPS � Anyone in a translation mood?
===
my Crystal Ball Translation
Don't throw rocks if it doesn't translate 100% !
<;-)
===
I do not pursue sometimes the discussions in an InterNet board, in which actually some crazy people believe, the silver once in too furthermore future the new standard of our monetary system will deliver...
But silver as new monetary standard? Sometimes I remember, if I think of the failure of the gold standard and its causing the world economic crisis of the thirties. Gold is simply too little available?fluessig around the gigantic national economies of the present? to hold. And silver? ...
And still something: If it should come actually somewhere to a bang, the precious metal possession will also be forbidden at security of bordering probability. Who holds then nevertheless precious metals further, either a Nomadenleben will have to lead or but be socially stigmatisiert. If it thus really slams, is anyway scythe. But because all know, it will not come to it. And the social consent, or like always one then those to appropriate decisions to call will leave, that is my firm faith, no chance to the Metallhortern. Because we live that in socialist times, should one never forget. The super+smart will be therefore not necessarily once first.
---
Thanks Sir IH for the CHARTS too !
<;-)

Thanks TATE.
snippets
... A 1% increase in the interest rate on a 30-year fixed-rate mortgage will equate to an 11% increase in the monthly payment (excluding taxes and insurance, which will, of course, vary). Two percentage points in rate will cost you 24% more in payment.
...It we don't borrow and expand, we go bankrupt. If we DO borrow and expand, we will still go bankrupt. So what's to lose? Which alternative course of action is more fun and more popular?

...No matter what anybody does from here on out, there will be many more losers than winners, and it will get worse and worse and worse with each passing year,
...The instant that you start to formulate and implement expansionary monetary and fiscal policy based on this worthless numerical garbage, you have sealed your fate

I recall FOA mentioning that he held shares of Goldfields (GFI) at that time. But he also has physical. I also have both shares of unhedged, debt free, profitable gold producers and physical precious metals (bullion and coin). My take is that the two are quite different in nature and I hold them for different reasons.

UNHEDGED MINERS:

First, I have shares of unhedged gold producers to hopefully be exposed to the rising price of gold and I have placed my bets accordingly. I know that most sectors will be hit hard in coming months/years as we are in a secular bear market that is pressured by poor earnings and increased competition from abroad, not to mention rising energy prices that will plague the US economy for several years hammering corporate earnings. I also have investments in the energy sector as well. That said, the precious metals sector will be one of very few sectors that will benefit. I hope to get more "bang for the buck" by being exposed to unhedged miners that are not hamstrung with forward sales and buried under a mountain of debt. So far it has paid off quite handsomely.

To give you an example: Goldcorp has excellent management that also stores physical bullion in place of currency. This shows me that they believe in their product and their industry. Barrick on the other hand forward sold much of their production which shows me that not only do they not believe in the value of the product that they produce but they see little future in the industry. The results so far in this gold Bull Market? Goldcorp shares soared 275% while Barrick shares have moved up 8%. For disclosure I have shares of Goldcorp (GG), Glamis (GLG), and Meridian (MDG). I sold Goldfields (GFI) and Harmony (HMY) some time ago as the dollar began to weaken and the strengthening Rand is sure to raise production costs.


PHYSICAL PRECIOUS METALS:

Secondly I have physical gold, silver and platinum. The difference as I see it is that shares are speculative in nature and do not have the staying power of physical precious metals. Gold has been money for over 5,000 years (over 9,000 years if you count Thracian gold artifacts as "money"). That is one hell of a record for money. Fiat currencies have a dismal record and tend to fail eventually. You can also think of gold as another currency that is free of government mismanagement. Physical precious metals are "safe haven" instruments that are essential for investment portfolios due to their "insurance" qualities. When the economy falters, currencies weaken, or the threat of inflation, deflation or stagflation rears up, hard assets of value do well and act as a counter weight to the plunging value of paper investments. You can also think of gold as the "anti-dollar". When the dollar gets weak gold gets strong. Considering that the dollar is in the beginning stages of a long term weakening trend now is the time to balance your portfolio toward precious metals.

I diversified further as I have gold, silver, and platinum bullion. I generally have one-ounce rounds and some silver bars. I accumulated quite a bit of gold (including Johnson Matthey wafers) and silver rounds (one and half ounce) by buying "safety" and "attendance" award medallions that are given out to miners while I did business in Nevada. At the time gold and silver was suffering under grossly undervalued prices and many needed the cash as mines were laying off hundreds of miners. I also bought some gold maple leafs from our host here at USAGOLD.

I also have gold and silver coin in my portfolio. I tend to collect US gold Liberty coins and Morgan silver dollars. I think the artwork and history to be much more interesting than other US coin series but that is just a personal preference. Not only is it a good hobby but the premium for many good quality collectable coins is not that much above bullion and there is the added benefit of protection against confiscation should the government decide to trample on the property right of US citizens again. I also have some foreign pre-1933 gold coin. Some of these I got from our host as well. I tend to focus on Mexican and South American coin when I can. For example I got some Uruguayan gold pesos from our host. I also have a few European gold coin as well.

I guess the point is you can have both but having them is for two different reasons. The shares are speculation for profit as the physical is portfolio insurance that should be acquired as a solid foundation of strength for your investment portfolio. Once you have established a comfortable level of physical metal to anchor your portfolio then you can branch out adding more speculative ventures for fun and profit. Anyway that's my take and it has served me well.

- Black Blade

...The Dollar remains the World Reserve Currency because the countries that buy our debt want American jobs.

...We have liquidity driven credit spreads (how else could GM borrow a quick $16 billion to fund its pension fund even though it makes no money selling cars? The only money GM makes is on financing mortgages, and that can't go on forever). Corporations are borrowing to be liquid; however, their profits are rising because they are being paid huge amounts of money to send jobs to China and India.

Thnx BB excellent and informing answer as we have all come to expect and it will be kept for road map on my future purchases.One thing I did see some of the miners are saying higher energy costs are eating into profits.The energy area is one place that is hard for a miner to economize on they use alot of various forms of fuels in mining but I see this as their only weakness in a commodity bull market.21

http://www.etherzone.com/2003/080703.shtml
MASS DISTRACTION
IS BUSH WORRIED ABOUT IMPEACHMENT?
By: Ed Henry
Just when airlines were beginning to recover, President Bush comes out with another scare story that is bound to further inhibit the passenger business. The same man from Waco who brought us daily stories about "weapons of mass destruction" is now telling us that he has intelligence suggesting the al Qaeda are ready to use our own airplanes against us again, particularly those planes on international flights.
On national television, Bush is personally warning us that the al Qaeda have a "mindset" to use "methodologies that worked in the past." Then he goes on to refer to one that didn't work so well.
Seeming to contradict himself, he tells us that this time the hijackers will tell passengers that they are merely being abducted for awhile. No doubt, the hijackers think this will keep passengers who reason that they are going to die anyway from attacking the culprits as they did on United Flight 93 on September eleventh.
A twenty-five percent failure rate would be enough to make most reasonable people wonder about using the same tactics again, but there are many more questions that come to mind.
For one thing, wasn't it the attacks of September 11th that caused us to put armed air marshals on every flight and allow pilots to have guns behind impenetrable doors? Do these people stand down if the hijackers are just taking hostages?
More importantly, whether you call it terrorism or guerilla warfare isn't surprise the crucial factor? Don't the terrorists want to catch the giant sleeping, catch him unaware, ambush him, and only then inflict the most damage possible? Isn't not knowing how and where the next strike is coming from the thing that terrorizes a population?
Does that sound like someone who has a "mindset" to keep repeating "the same methodologies that worked in the past?" If guerilla warfare operated that way, the Indians would still be waiting at Bull Run for the 3rd Infantry to return.
Meanwhile, the United States is wide open to subversive attack from many angles. For instance, something like six million containers a year are off loaded in our seaports and sent by truck and train all over the country while only two or three percent are inspected. The narcotics business brings in tons of white powder that could just as easily be anthrax or something worse.
If the al Qaeda are as heavily funded as we are told, maybe we should be thankful they haven't shipped in more tools of destruction, even nuclear devices. Perhaps Saddam Hussein sent all of his chemical and biological laboratories to our shores in 40 foot containers. And did you know that China recently opened the world's largest container shipping operation right off our Florida Coast in Grand Bahama?
Still, if the President of the United States is willing to make such a bold statement to the American people without letting one of his minions do it, and does so when he is being widely criticized for his statements about weapons of mass destruction, it has to make you wonder. He certainly wouldn't want to be crying wolf again.
And that gets us into even more paranoid questions that still need to be answered about 9/11 like whatever became of the "Home Run" technology developed in the Seventies that allowed a hijacked plane to be controlled from the ground like a drone with all its onboard instruments shut down. We are still waiting for the answer to that one.
"Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact."

http://story.news.yahoo.com/news?tmpl=story&cid=580&ncid=580&e=2&u=/nm/20030806/bs_nm/economy_mortgages_dc
Snippit:

NEW YORK (Reuters) - A near record number of Americans applied for mortgages to buy homes last week, rushing to beat a big jump in interest rates that has already tempered a long-running refinancing boom, a report said on Wednesday. "People want to get in before it's too late," said David Littmann, chief economist at Comerica Bank in Detroit. That jump in rates has caused mortgage refinancings to plunge, which economists fear could dampen the strength of the expected recovery. Refinancings have put billions of dollars into consumers' pockets the past two years, providing crucial support to the struggling economy. Refinancing has helped support consumer spending for over a year and a half, as consumers have pulled equity from rising home values and cut their monthly mortgage payments. With refinancing in decline, consumer spending will have to be buoyed by other factors like this year's tax cut or income growth.

Black Blade: As expected the last minute rush for mortgage applications has begun as "no one wants to be left behind" or "miss out". Meanwhile Refis are sinking and that will eventually show up in reduced consumer spending as consumer spending is two thirds of the economy. The risk of course is that those with adjustable rates will lose their homes to foreclosure and some will lose their homes as they become unemployed in the "jobless recovery". Another problem as evidenced by some friends who are trying to buy a home is even as they have the fixed rate locked in, that expires in a few days. Meanwhile the mortgage companies involved are dragging their feet approving the sale in what appears to be an attempt to let the "lock" expire so they may get a better deal from the buyer. They are not the only ones I have heard about in the same situation. Meanwhile the bond market will continue to suffer at record highs under threat of rising interest rates while the Treasury prepares to swamp the market with a wave of new note auctions to service soaring record debt. Hang on to your hats and a storm is brewing.

http://www.etherzone.com/2003/henr080703.shtmlAmended address.

That is the major concern pointed out by several miners at the Diggers and Dealers conference. Rising energy costs was singled out as the overriding concern for some. The miners are certainly not immune as all sectors are under threat from higher energy costs. That is the one cost that sinks directly to the bottom line and no industry can survive without access to affordable energy. The question is whether rising profits will outpace the rising costs. Even with higher gold prices many miners have weaker earnings due to rising costs. This also hurts as it leaves less cash available for exploration and development constraining growth. That's why the majors are growing through acquisition as they deplete reserves. We will likely see production decline for at least the next 7 to 10 years regardless of the gold price because few miners have been replacing reserves over the last few years � they were simply trying to survive while gutting the heart out of their ore deposits. Of course with physical gold in hand that is not much of a concern. Again the "safe haven" of physical is obvious.

- Black Blade

http://www.gold-eagle.com/gold_digest_03/droke080703.htmlThe "trading range economy" and the gold market
August 7, 2003 - Cliff Droke
Excerpt: "When a series of parabolic price cycles are drawn around gold's 22-year priceline, we see a bullish-looking parabolic bowl which has been gradually rounding over the past few years and has just started to push prices higher. The incline of this bowl is still rather shallow (relatively speaking), although with each passing year the "rim" of the bowl becomes steeper. The parabola in the long-term gold chart strongly suggests that gold has seen its price low for this decade.
Moreover, a series of bowls can be drawn in the long-term gold chart beginning with the late 1987 peak to the present and also from the 1996 peak to the present. All of these patterns combine to form a picture of increasing strength and momentum, and it suggests that the long-term accumulation process is nearly complete with the long-awaited mark-up process about to begin."
I couldn't agree more that gold has been preparing it's entrance to a standing room only audience, debuting in a serious role almost replaced by burlesque. An assignment with only one leading man and lady. The "show must go on" to satisfy in GLOBAL performances, because here is star flavor and talent with enough rehearsals to preempt any stage fright, miscues or off key notes!

http://www.nytimes.com/2003/08/06/national/06WIRE-RECA.html?ex=1060833600&en=fb8782d5b23bb038&ei=5062&partner=GOOGLESnip:
"The recall election on Gov. Gray Davis of California went into an unpredictable freefall today, as one of the state's most respected elected officials, Senator Dianne Feinstein, announced that she would not run to replace Governor Davis, and Arnold Schwarzenegger, a politically untested movie star, announced that he would. As extraordinary bookends on a day of fast-moving events, the two decisions could not have been more dissimilar in style and substance. Public opinion polls have identified Ms. Feinstein, a Democrat, and Mr. Schwarzenegger, a Republican, as among the most popular alternatives to the governor, who faces a recall vote on Oct. 7."

Waverider....only in California!!

http://www.nytimes.com/2003/08/07/business/07LEND.html?ex=1061524800&en=c9280837546d75a3&ei=5004∂ner=UNTDSnip:
"Fannie Mae, the giant mortgage finance company, faces much bigger losses from interest rate swings than it has publicly disclosed, according to computer models used by the company to estimate the value of its assets and debts. At the end of last year, the models showed that Fannie Mae's portfolio would have lost $7.5 billion in value if interest rates rose immediately by 1.5 percentage points, internal company documents provided to The New York Times indicated. At that time, the market value of all the assets on Fannie Mae's books, minus all the company's debts, was about $15 billion. So it would have lost roughly half its market value from such a sharp increase in interest rates, according to the models.

The models were provided to The Times by a former Fannie Mae employee, in return for assurance that he not be identified...The former employee, who now works for a company that does not directly compete with Fannie Mae, said he had decided to publicize the documents because he was worried that Fannie Mae was becoming a risk to taxpayers and the financial system."

Waverider: Good guano on Fannie...

http://news.bbc.co.uk/2/hi/business/3129995.stmSNIPS:
The Tehran Stock Exchange has taken steps to try to halt an explosive rally in share prices amid fears the market could be headed for a crash

The head of Iran's stock market sent a statement to brokers forbidding share price increases for a two-week period.
...
The surge in share prices has enticed many ordinary savers into the stock market who, so far, have enjoyed the chance to make some easy money.
The gains have been driven by high oil prices, an increase in the amount of cash being repatriated from abroad since the 11 September attacks, and rapid growth in the number of private investors
...
"People will hold their breath for fifteen days, and then start aggressively buying again, prolonging the inevitable," [Professor Mehrdad Valibeigi, an Iranian economy expert at American University in Washington DC} explained.
Brokers were also worried about the impact of the cap on prices, with one broker telling Reuters that the action will destabilise the market

"...At the end of last year, the models showed that Fannie Mae's portfolio would have lost $7.5 billion in value if interest rates rose immediately by 1.5 percentage points, internal company documents provided to The New York Times indicated. At that time, the market value of all the assets on Fannie Mae's books, minus all the company's debts, was about $15 billion. So it would have lost roughly half its market value from such a sharp increase in interest rates, according to the models...."

Wal-Mart Says Second-Quarter Profit Topped Forecasts (Update2)
Aug. 7 (Bloomberg) -- Wal-Mart Stores Inc., the world's biggest retailer, said second-quarter earnings rose more than it expected as shoppers spent some of their tax-rebate money and bought more swimsuits and shorts.


Along the supply chain, nobody takes the cut WalMart gets. The $$$ gets laundered thru WM and a pittance ends up in Bangledesh or Guatemala or China.

How does this benefit America?

http://www.iht.com/articles/105367.htmlThe Styrian Oak, also known as Terminator is running for Governor in the Peoples Republik of Kalifornia. Repent, Californians or risk being terminated. ;>) cb2

http://www.iht.com/articles/105457.htmlThailand is paying back IMF loans, escaping the tentacles of globalization and pledging never again to be caught up in the scheme.

Interesting read, as if the turning point has been reached. cb2

before today's tranche of 1o yr TSY's are in it. cb2

http://www.usps.com/cpim/ftp/bulletin/2003/html/pb22107/e.html#0.1.LMRPOZ.JBT10J.PIRFIH.OEmployees
ELM REVISION

Acts of God and Civil Disorders

Effective July 24, 2003, the Employee and Labor Relations Manual (ELM), section 519, Administrative Leave, is modified by adding civil disorders to the provisions already included for acts of God. Section 519.22 is eliminated. Information on civil disorders is incorporated into ELM 519.21, and subsequent sections are renumbered.

We will incorporate these revisions into the next printed version of the ELM and into the next update of the online version accessible on the Postal ServiceTM PolicyNet Web site at http://blue.usps.gov/cpim; click on Manuals.

Employee and Labor Relations Manual (ELM)

Uh oh, is the USPS expecting some chaos??? Gotta love these guys "Civil Disorders" are now "Acts of God," instead of "Acts of Congress." LOL

http://www.forbes.com/2003/08/06/cz_jd_0806watch.html?partner=yahoo&referrer=A number of positive comments about gold and gold stocks over at Forbes as well as an insight, noted below, into how a newsletter writer arrives at being negative on gold.

snip

".......Mike Norman, editor of the Economic Contrarian Update, a daily online service that looks at news headlines and other measures of sentiment and takes positions against the herd. "Gold was a terrific buy--back in 2001 at $270 an ounce," says Norman, who cites several reasons--in addition to bullish media commentary--for being bearish on gold. One factor is the rise in interest rates, which makes borrowing to buy gold more expensive. Also, when gold was cheap, most miners decided to stop selling their future production at a fixed price (hedging), which allowed them to take advantage of a rise in gold's price. That's no longer the case, Norman says, making reference to the Commitments of Traders data at the Commodity Futures Trading Commission showing a net short position among commercial firms. "The hedgers are being smart by locking in $350 an ounce. It's the speculators who are long out the wazoo!"

Norman also points out that 2,800 tons of gold were used in jewelry production last year and only 400 tons was directed toward investment demand in the form of coins and bullion. Of those 400 tons, 95 tons were consumed by Japan last year, which Norman says had the highest rate of financial-related suicides in history. With the Japanese economy marginally improving and jewelry demand declining since 1997 ("All the hip hop guys are into diamonds now, not gold"), Norman says gold prices are bound to head south, especially given the rising amount of worldwide production. Furthermore, he says, "There are a lot of other places to put your money as an alternative investment just a keystroke away."

snip

Does he think they were low back when the POG hit $800?

http://www.levy.org/docs/ppb/ppb73.pdf Norman IMO is very wrong after reading the Levy Institutes "working paper" that calls for a 30% devaluation of the green back among many other things like a 600 pt. or less SnP, and a 25% RE crash, etc., etc., etc.

A 30% dollar devaluation would value gold $500+

A good read that should be read by all! (NIA)

http://www.usagold.com/gold-coins.html

Start building a firm foundation under your portfolio!

http://focus.comdirect.co.uk/en/detail/_pages/charts/main.html?sSymbol=SLV.FX1&sTimeframe=iD&useSettings=0&showSettings=&sid=&hiddenTimeFrame=&sOrdType=price&sScale=linear&sMarket=SLV.FX1&iType=1&sAv1=na&sAvfree1=&sAv2=200&sAv2free2=&sAv2count=1&iInd0=na&sBench1=na&sBenchcount=1&sBench2=&sBench2count=1&showBenchmarkSearch=&iInd1=2&iInd2=na&iIndcount=1&sSettings=naOkay...so today's a Silver day with a Golden lining....

http://biz.yahoo.com/rf/030807/markets_fed_openmarket_2.htmlPutting a ribbon and bow on it.

With this presentation of data coming from none other than Reuters, and running similarly counter to your claims of fair reporting, I'm afraid it must look like I have myself come irredeemably from the foul ranks of "big media". There goes my credibility for sure -- or theirs. Or both? Getting to the crux of it, who is the target audience that Reuters is trying to mislead by delivering "false impressions" in this specific article as you see it?

Maybe we could invite them to join this dance of ours. CoBra(too) would surely get a big smile to see a wide-eyed Mr. Strauss receiving group lessons in waltz from any patient, willing and well-intentioned instructor. (could not resist the convenient metaphor)
:-)

The key point again, as always, as we see the Fed today add $7 billion through overnight repos (largely at 0.947%) and $5 billion via 28-day repos, we should bear in mind, as the Fed's own reps have previously affirmed, there is no "meaningful limit" to the Fed's power to introduce new money ... to dance the 'Flying Dutchman' with goods and services.

Bottom line: Choose gold as the bedrock upon which you build your portfolio and you may need never worry about your wealth being undermined by government's inflationary penchant.

R.

excerpts:

"[T]he IMF has issued a clear warning, in its annual review of the US economy, that if the US doesn't do something about its budget deficit then the economy will continue to fail to meet its potential. The Fund said that the budget deficit could reach 6% of GDP in 2003, that the economic recovery has been uneven and that risks still persist to the downside."

"The development of the Indian market for gold and silver futures trading is continuing apace. The National Commodity and Derivatives Exchange (NCDEX) has asked Brink's Inc (which is active in transport and storage of precious metals) to help set up a backup support system and warehousing facilities. The NCDEX expects to start futures trading in gold and silver by this October."
----------

On that last note, a house of cards can grow to an impressive status until, with one tremor, the foundation is all that remains (and newly revered in the aftermath as the asset of choice).

Don't wait for the aftermath, move your lofty wealth to solid footings.

R.

Today, the Fed replaced yesterday's $5.25 bil. one-day RP with a $7.0 bil. one-day RP (related to an anticipated higher CIC over a summer weekend?) and also reported a $5 bil. 28-day RP (did a 28-day RP from last month mature?). These activities involve one item on the Fed balance sheet (an item supplying reserves) and without seeing the changes in all of the other items (those supplying reserves as well as those absorbing reserves) -- which items are essentially outside of the Fed's control -- no conclusions can be reached. Changes in all of the items for the week ended yesterday will be published by the Fed today at 4:30 p. m. ET. but there's no reason to expect that weekly report to be other than routine.

Consider this

look at the liquidity of the economy as you would a refinery. There are storage tanks and pipes
linking the whole thing together, and all kinds of gauges and values to get readouts. Money is stored in cash,
notes, bonds, stocks, commodities, etc. The money moves through the pipes and seeks out the the
tanks where the return is highest and risk lowest. The FED is the governor of the entire system, they can directly inject more fuild into
the system, and fine tune the gauges on the pipes to help direct the flow in the directions they
desire. However, there is a limit to what they can do, and the history tells us the machine
can break down, particularly when they lose faith in the governor and the machine.

Now, what of that Reuters article and the data it presents?

Is it attempting to mislead it many readers, including those in our intimate little group? Or do they rightfully assume that the audience knows the score?

I think the latter.

Having been given exposure this broader picture, maybe you will reevaluate your early narrow assessment and be willing to cut me a little slack if not outright retracting your implicit accusation of a con?

R.

Indeed, while there may be no meaningful limit to the Fed's power to create new money, it is not to be mistaken for any lack of meaningful consequences should it wield that power. And though the underlying motivations may well-enough bea desire to do good, like a bull in a china shop it has far greater power to destroy -- even in the absence of directed malice.

In recognition of this asymmetry, gold is a prudent foundation for every portfolio.

R.

Federal_Reserve, Agingfast and TownCrier...

I've been diligent at trying to follow along with your thoughts to better understand this thing called money - that Alan Greenspan has admitted to not understanding. This is not as easy a task as the average Joe or Jill would think.

May I ask a question or two? Is there a source or site that gives the total monetary amount that the Fed. has put into circulation, or better yet, gives yearly percentages of increase. Am I correct in thinking that the money supply should increase in line with the overall ecomonic expansion to remain in some sort of balance. That is, if both the total monetary supply and the GDP increase or decline at the same rate, then prices should remain reasonably calm. I know this do not consider the trade deficit (outflow of dollars) and other determining factors but is this assumption basically correct? If so, then how much is the monetary supply increasing as opposed to GDP? We'll have to wait to see if the tide of dollars held outside the country ever return in numbers great enough to swamp the boat.

Also, if the Great Usury Credit Company decides to grant me a credit card with a $10,000 limit which I immediately max out to buy gold and silver, has the Company basically created $10,000? If all money is debt, then isn't all debt money? If so, how much of the present debt should we add to government M1, M2 or M3 figures to estimate total monetary supply? Can anyone even venture a reasonable guess at the amount of debt, credit, or money that exists?

I know we've been through this before, I don't expect definitive answers. Economics is similar to the study of ethics in that there often are no "right" or correct answers. Isn't this fun?
Rich

These are from Adam Hamilton ...

US M3 money supply and growth....

$8,730b +0.8%

M3/official US gold reserves=dollars per ounce

$33,360 +0.8%

Yes, my dear TownCrier, you and Reuters are two peas in a pod when you report the Fed's daily securities acquisitions without reporting also the daily maturities.

So, what insight does that then give us of the intent? Is it saying that Reuters is in league with someone like me who is, in the final analysis, doing what little he humanly can do in the wide world to raise public consciousness about the unique merits of gold in this economic climate? If so, great. I welcome them aboard.

All things considered, I believe you are barking up the wrong tree, but your motives for doing so remain as an odd piece in the puzzle.

R.

http://www.usagold.com/DailyQuotes.htmlSnip:
"Gold gained on the back of a stronger Euro, dismal economic data, and the end of this quarter's $60 billion Treasury note auction. Traders initially pushed gold higher on the release of today's economic data and soon the Funds and speculators joined the action as some covered short positions giving the gold rally more momentum. Gold gained as the U.S. dollar weakened against major currencies even as the sale of the 10-Treasury note was described as having a decent showing..."

http://www.federalreserve.gov/releases/If nourishment is what you seek, this will keep you in gravy up to your elbows 'til you tire of feasting.

I would steer you initially to H.4.1, and beyond that, let your curiosity carry you where it will.

R.

We're not talking here of the undeniable attractiveness of gold but rather of the widespread misunderstanding of what is involved in the Fed's daily securities operations -- which have the goal, as I said before, of keeping Excess Reserves (Total Reserves minus Required Reserves) in line with a specific, targeted level. I'm not defending the Fed; I was criticizing it decades ago when many members of this forum were yet in swaddlng clothes. But to maintain and preserve such criticism's integrity it has to be properly directed. A correct understanding of the Fed balance sheet and the daily securities operations undertaken in connection with it can be found in the Fed's publication entitled "The Federal Reserve System, Purposes and Functions."

I was so incensed by this article and sent a message to be forwarded to the Author.(Had confirmation it was passed along)

At the same time I asked for an opportunity to set the record straight about silver , its benefits and multiple uses with a reply to the Boerse.de.

One of his peefs was that he bought high. He is looking at this kilo bar of silver using it as a place to rest his eraser on his desk, how it left a mark and how much time it took him to polish it. (I could suggest a place to rest his eraser!)

He also mentioned the PTB would not let silver or precious metals to be held by citizens for long before it would be confiscated.

Unfortunately, this is the kind of propaganda used to scare potential investors. It seems to be a global effort to surpress interest in accumulation in gold and silver.

The Deutsche B�rse essay about the "Crazy Nomads" and silver is just that - crazy. ... and probably not worth the effort to translate, anyway.

At least another Gold-Hamster sees it that way ... cb2

Have we been had? Who bought the 'junk' bonds?

http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt This is from the source Randy just gave us, thanks TC.

If I'm reading this right, the total money supply (M3) that the Fed. thinks exists, has doubled since late 1994. I doubt if anyone knows how much of this has left the borders of the USA. It's not over till the fat lady sings and "Bigfloat" returns! Then try to buy silver for five bucks/ounce!

Thanks Randy for the link and thanks to Agingfast for his comments and concerns about the possible misconceptions that TownCrier's daily Repo postings could produce. A longevity of study of any specific subject often produces a familiarity of the habits and functionings of that subject. A level of expertise can be attained that allows conversation, among the very knowledgeable, on a level that might seem incoherent to the less well versed. Without this level of knowledge or understanding it is indeed not uncommon for the student to misunderstand the professor. With this in mind I'll remind everyone that September coffee puts expire tomorrow.
Thanks,
Rich

Over the past couple of months I have become a regular reader of this forum, the commentaries and other sites relating to the state of the economy. I am beginning to gain a limited understanding of the interactions of the various elements of the economy, despite the handicap of a rational background in math and philosophy.

I have been wondering what I can do with funds that are somewhat imprisoned in a retirement account (Vanguard) to ensure their safety during a severe economic downturn. My options seem to be mutual funds, bonds and stocks -- none of which are destined to fare to well according to what I am reading. Precious metals don't seem to be on the menu in retirement accounts. Or am I missing something big? (I can change the kind of retirement plan my company will use in future years, if that will help.)

All the popular stuff is here. GDP, Money, Census...


http://www.economagic.com/popular.htm

Here is a chart leading up to the 1987 crash

http://www.lowrisk.com/crash/crashcharts.htm

While this chart is on a monthly scale, I was struck by how similar the chart looks to the rally on the daily chart on the SnP up from the March 12th lows.

Really shocking.

http://finance.yahoo.com/q?s=^GSPC&d=c&k=c1&a=v&p=s&t=6m&l=on&z=m&q=l

I'm not predicting a crash, but its possible.

You can do a rollover from Vanguard to your own IRA retirment account through USAGOLD and then purchase gold, platinum or silver for delivery to that account. For details, contact George Cooper 800-869-5115 Extension #102. We help people with this type of rollover account all the time. We have an information packet on the process which we will be happy to forward to you. Hope this helps.

To invest in equities is the message I'm finding ever more, as never before in my mail box.

One very recognized global equity fund sent me the following 6 page ad - on high quality paper - and started their promotion:
***
Dear (what else-except "stupid") Investor,
Over the last 12 months we have witnessed historic geo-political and financial turmoil around the world. Over the next 12 - 24 months we will see a surprisingly strong economic recovery that will catch many off guard. ... immense profit opportunities ... blah, blah ... don't miss it!

Free Newsletter Reply Card and so on included... ***

My take, besides the chilling fact how they came about my address, is, in fact, the blatant idiocy to cater to the stupidity of the maxxed out and loss bound believers of main stream spin.

Unfortunately, still a majority. A majority of a losing proposition. Not only mortgaged homes or any value in their 401 K's, but their butts in the economy, id est jobs, as it was forfeited to cheaper producers.

So the US of A is totally indebted to the rest of the world at an ir-redeemable rate - and even as Kalifornia is in need of a Terminator - so is Greenspan and his FED! ... and by extension the rest of the neo-con-artists.

To get back to reality - there has never been a better time to invest in true value - GOLD! cb2

Remarx: your words....

"I am beginning to gain a limited understanding of the interactions of the various elements of the economy, despite the handicap of a rational background in math and philosophy."

This strange combination of an exact science and philosophy strikes me as unusual but I'm sure your handicap has proven beneficial to yourself. Unfortunately, the economy is constantly disturbed by government meddling which is only occasionally rational. I believe this infrequent use of common sense is an intentional act to catch us unawares or, it may be that the small doses of rational behavior are unintentional as they may be unwittingly enacted. Certainly, researching the facts of converting into a retirement fund invested in silver makes sense to me. I believe silver will greatly appreciate but the timing of this is still somewhat hazy. If I had a retirement fund, I would ask Mr. Cooper if I could put the whole enchilada into silver. Hey, George, can you retrieve what I've paid into social security over the last 40 years? Now that would buy a nice pile of silver!
Welcome
Rich

By posting this long post I'm taking a chance of either boring and/or upsetting many of the big brains who frequent this gold sanctuary. But I've had a recent experience that I just have to share � and I've got no one else to share it with. So here goes.

I'm going back to college � after 20 years of civil engineering, I'm not too keen on the commodification of the profession, so I've entered an MBA program with an emphasis in China to explore related but different professional opportunities. That's right, export the service jobs to augment the exported manufacturing jobs.

Now, my undergraduate degree in civil engineering didn't include macroeconomics, and it's a pre-requisite to entering the international MBA program. But that's great, or so I thought, because thanks to Alan Greenspan, fellow real money advocates,and my perpetual pursuit of truth, macroeconomics has become my favorite subject and true obsession.

Well, I just finished macroeconomics 101 at the nearby state university. I didn't do too well. I think I passed because of my in-class participation.

In the mind of the professor who taught the course and in the minds of the professors who wrote the text book, things like debt, fiat, FOMC market intervention, inflation, trade deficits, derivatives, etc, etc, are all normally fluctuating parameters within their adopted main stream, PC, economic model. Their arrogance says: "things are great � everything is operating as planned, and anyone who thinks otherwise, well, they're the result of uninformed and undisciplined rationalization in support of their misguided investments. Or as my father used to say, the only reason there is anything in my head is that "nature abhors a void"

I have to say, the most frustrating thing for me was the overriding guise of scientific certainty that permeated the presentation of these models. My questioning of the assumptions, limitations, and leaps of faith, mostly fell on deaf ears and even worse, frustrated my fellow classmates who sponged in the propaganda and/or just wanted to know what was on the next test. Can you just imagine what a pain-in-the-A� I was?

So while my fellow students were copying each others papers, I was flunking test essay questions like "why is the national debt overstated?"

Anyway, since I'm sure by now you think I'm writing this to compensate for my poor performance, low self esteem and lack of emotional control, I thought I'd let you judge for yourselves the state of undergraduate macroeconomics.

There's this new thing in college that I was not afforded 20 years ago � an electronic text book. I have copied a small piece out of the text book for your reading pleasure. When you're done reading it, there will be a test. Try to think of the questions that will be on the test and let me know how well you think you would score. Here's the moral dilemma: Do you tell the professor what you think because if you don't your head will explode or do you go for the "A"?

I wish I could have provided the whole text book so you could get the full class effect � but I think the following passages are adequately illustrative.

Here it is:

****************************

Why the Debt and/or Deficit Burden May be Overstated

Many times the press presents alarming news of the national debt. We hear how our children are born into massive debt, and how if we pile the debt up in $1 bills, it would stretch far into the skies. Indeed, the debt is large in absolute numbers. But there are several reasons to believe that concerns about the debt and deficit are overstated.

1. Much of the debt is owned by the U.S. government itself. As discussed above, when one branch of the government runs a surplus and simply buys federal securities with the excess revenue, the total debt doesn't really rise (except on the books). We could have just as easily apportioned the surplus tax dollars of one program to a budget category that was in deficit and eliminated the need to borrow. This is the current situation with the surplus in the Social Security Trust Fund.

2. The deficit-to-GDP and the debt-to-GDP ratios are more accurate measures of the "true" size of the deficit. A nation's debt is in many ways similar to an individual's debt. Suppose that each of two people in a given year accumulate $10,000 in credit card debt. The first person has an annual income of $20,000, so the debt to income ratio is 50 percent ($10,000/$20,000). The second person has an annual income of $100,000. This person's debt to income ratio is only 10 percent ($10,000/$100,000). Obviously, the second person's debt load is much lighter than the first. Similarly, the U.S. government can carry larger deficits than Italy, for example, because its economy is larger. As shown in the figure titled Federal Deficit (% of GDP), the U.S. deficit to GDP ratio was negative in 2001. In 1983, the ratio was the highest in quite some time at 6.1 percent. The figure titled National Debt Held by the Public (% of GDP) illustrates that the U.S. debt to GDP ratio peaked at more than 50 percent in 1994 but fell dramatically to just under 33 percent in 2001.

3. Inflation makes the real interest payments smaller. When the government borrows money, it pays the money back at a future point in time. The purchasing power of that money is less than when the government first borrowed it because of inflation. What we really want to measure is the government's real debt so we must correct the deficit for the effects of inflation.

4. Many state and local governments run surpluses. In fact, most states are prohibited by law from running deficits. If we are adding up total government deficits, why not subtract the size of the state and local government surpluses? Current reporting practices, however, separate national accounts from state and local accounts.

5. The accounting rules for the federal government are different than those for private businesses. Accounting methods in the private sector separate current expenditures (generally expenditures in which the purchased item is used up within one year) from capital expenditures (long-term purchases or investments). For example, when a university purchases paper, the paper is considered a current expenditure for which the cost is fully deducted as an expense in the year the paper was purchased. But if the university purchases a new building that will last 100 years, the full cost of that building does not show up on that year's expenses. Only a portion of the building can be deducted as an expense. The building is depreciated over time, say, ten years. When the federal government purchases a new building, however, the full amount of that purchase is deducted in the year the building was purchased. There is no separate capital account in federal accounting. This makes the federal government's expenses look higher--and thus deficits look larger--than they otherwise might.

Myths about the Deficit and Debt

We have yet to ask the question, why are large structural deficits and the correspondingly large debts bad? Better yet, are they harmful at all? Before we answer these questions, let's dispel some common myths about U.S. deficits.

1. The deficit imposes a net burden on future generations. This idea was a major theme of Ross Perot when he was running for the Presidency in 1992. There is some truth to this statement, but not much. This statement conjures up an image that the younger generation(s) has this huge tax bill hanging over their heads which must be paid off entirely. But countries never die--or at least they never plan on dying. There is no reason, therefore, why our children and their children's children cannot keep passing on the debt forever. In fact, so long as the economy continues to grow, future generations can continue to pass on ever-larger debts. Similarly, if you lived forever, you would never have to pay off your credit card debt entirely; you would simply have to service the monthly interest payments.
More importantly, payers and recipients of the debt are both primarily U.S. entities, so income is simply redistributed from one group to another. Suppose Ross Perot were elected President and decided to pay off the national debt once and for all over a period of say, 5 years. How would he do it? He would have to raise taxes and cut spending so that the U.S. ran significant surpluses (on the order of $1.2 trillion per year). The government would then take the funds directly from the tax payers and indirectly from the citizens who lose the benefits they used to receive from government services, and use those funds to pay off the bond holders. Does the money leave the country? No. It is simply transferred from all tax payers to the bond holders. In fact, many bond holders may find that the value of their bonds were offset by the higher taxes and/or lower level of government services.
There is one case where the net burden argument may hold some weight. As of September 2002, about 17 percent of the U.S. national debt was held by foreign investors. To the extent that future generations must pay off this debt, and the income leaves the country, future generations are burdened with the current generation's run-up in debt. Fortunately for the U.S., the foreign-owned portion of the debt is small relative to many other countries, and many foreigners are willing to leave their investments safely in the U.S.

2. The national debt will bankrupt the nation. Huge debts have bankrupted some nations, but the U.S. is far from that scenario. The main difference is that most of its debt is internally owned and the government has an enormous power to raise revenue via taxation. In addition, the government never has to pay the entire debt off at one time since the government never "dies."

*****End*****

Test question: (20 points) What are some common misperceptions about the debt and deficit? What special interests perpetuate these misperceptions?

Next class: business finance

"None of us really understands what's going on with all these numbers." -David Stockman

I wouldn't worry about the duplicate post. It happens sometimes. I enjoyed reading it though. (I did only read it once however.)

R.Powell, Rich do you think 5 dollars is now silvers floor?They have not been able to keep it below that mark as of late.21

http://db.riskwaters.com/public/showPage.html?page=3007link is a good hedgeing and swaps education.
Sinclair should close his yap.

Below is not from link.
...Investors who bought $10 million of the Treasury securities in mid-June would have lost about $890,000 if they sold them today.
**************
...An underlying shift in global bond trading strategies is starting to burnish the bedraggled dollar.The change centers on "carry trades," in which investors borrow in a low-yielding currency in order to buy higher yielding assets elsewhere, collecting returns from the interest rate differential.
...With the recent back-up in Treasuries yields, a lot of the carry trades of the higher yielders against the lower yielders have been unwound quite aggressively. It has worked to the dollar's favor," said Marcel Kasumovich, head of G10 foreign exchange strategy with Merrill Lynch.
...Until two or three months ago, the dollar -- to its disadvantage -- had been used as a cheap funding currency to accumulate assets in euros, sterling, and Canadian and Australian dollars, Kasumovich said. But since then "a significant position unwind" in those currencies has taken hold, lending the greenback some reprieve, he said.
****************
...What components were the biggest beneficiaries of the dollar decline?" one might reasonably ask. IBM achieved 70% of its 10% revenue growth due to currency gains from a weaker dollar. Eastman Kodak would have shown second quarter revenue growth of negative 5% instead of the 1% it did show had currency not been an issue. And of the double digit revenue increase (10%) from McDonald's in the most recent quarter, a full 60% of that was due to foreign currency gains.
Dow Jones: Currency Impact on Q2 Revenue
Q2 Revenue without Currency**Gain*Difference
3M.....................11.0% 5.4% 5.6%
Altria.................-1.3% -5.7% 4.4%
American Express........6.9% 4.9% 2.0%
Caterpillar............12.1% 7.9% 4.2%
Du Pont................10.0% 5.0% 5.0%
Eastman Kodak...........0.5% -5.5% 6.0%
Honeywell...............2.0% -2.0% 4.0%
IBM....................10.0% 3.0% 7.0%
Johnson & Johnson......13.9% 8.9% 5.0%
McDonald's.............10.0% 4.0% 6.0%
Procter & Gamble........8.0% 4.0% 4.0%
AVERAGE.................7.6% 2.7% 4.8%

Bound Spirit,I have just grinned and bared it and given them the answers they want.I educate myself outside of class with things like this forum and books.As long as you know your right tell them what they want to hear and smile inside.Rich Powell is 5 dollar the basement for silver now?They have not been able to knock it down lately.21

Bound Spirit (08/07/03; 20:47:47MT - usagold.com msg#: 106865)
my sincere apologies
===
No need to apologize ! I can understand how your twitching finger hit the "enter" button three times. <;-)
You have confirmed my experience of trying to gain additional knowledge by taking more University courses !
---

As you have found, the present teaching of "NON-Scientific or Engineering" courses, in many Universities is not "real world", but, the desired "theoretical strategy" of the Professor. Whom, in most cases, has never been outside the Hallowed Halls. FIRST, let me give you a suggestion --

SOOOO, to obtain a passing grade, one must keep "two sets of thoughts", and manage to also perfect your POKER FACE ! While you are ROFLYAO in your mind, you must be able to spout the "SPIN LINES" to gather your A+'s !
Remember, an education is susposted to open your mind, and allow you to be better able to apply the basics ! With your new education, together with that learned from 20 years of the REAL WORLD, you can become an interpreter for all of us ancient "unlearned", but, educated folks.

REPEAT the MANTRA ! (Three times !) <;-)

"Things are totally different this time !"
"Things are totally different this time !"
"Things are totally different this time !"

SURE, -- In a pig's eye !
GOOD LUCK to you !
<;-)

Education is a weapon whose effect depends on who holds it in his hands and at whom it is aimed.

� Josef Stalin (1880-1953)



I would suggest you learn to duck :) When I was going to college my father taught me a valuable lesson .... and that was that going to college is 99 percent about getting that piece of paper at the end.

Never confuse intelligence (or wisdom) with education.

Best of Luck,
Nomad

The propaganda, er, text was an amazing read! I took a class of the same title in Canada about 18 years ago. It was all theory, and demonstrated little or none of the brain-washing present in your example. Ken. economics was presented as but one of several possible economic theories. What a difference an international boundry makes!

I wonder if we are all going to appear 3 times tonight!

- Survivor

Sir TC just informed me that it appears that the SYSTEM was having TECHNICAL PROBLEMS and SOME people, <;-) -----
When they did not see their post appear, hit the button a few more times and ----
YOU see what happened !
<;-)

While sifting through Karl Marx work Capital I came across something I did not expect.When Marx discusses money he relates that money is the commodities gold and or silver,his view was paper was not money.21

Gandalf, Dollar Bill, 21Mabry, A Nation of One - well done, I surely deserve the implied ridicule - I am amazed at the instant conspiratorial team you formed. Now I know these things don't take much to organize. If only I could understand the codes used by market insiders. Is it something they hear on MSNBC?

Anyway, thanks for the understanding - that class would make your finger twitch too - trust me.

Thanks Gandalf - I was certainly feeling paranoid!

single ping only

Aye Captain, Piiinnnggg.

http://www.miningweekly.co.za/min/utilities/search/?show=38507
Snippit:

World gold consumption is set to increase by 300 to 400 tons a year over the next five to ten years, as a result of new industrial applications of the metal, according to the World Gold Council.

Black Blade: So the new gold slogan may be: "Gold, it's not just for jewelry anymore". Hmmm�

http://db.riskwaters.com/public/showPage.html?page=3007link is a good hedgeing and swaps education.
Below is not from link.
...Investors who bought $10 million of the Treasury securities in mid-June would have lost about $890,000 if they sold them today.
----------------
...An underlying shift in global bond trading strategies is starting to burnish the bedraggled dollar.The change centers on "carry trades," in which investors borrow in a low-yielding currency in order to buy higher yielding assets elsewhere, collecting returns from the interest rate differential.
...With the recent back-up in Treasuries yields, a lot of the carry trades of the higher yielders against the lower yielders have been unwound quite aggressively. It has worked to the dollar's favor," said Marcel Kasumovich, head of G10 foreign exchange strategy with Merrill Lynch.
...Until two or three months ago, the dollar -- to its disadvantage -- had been used as a cheap funding currency to accumulate assets in euros, sterling, and Canadian and Australian dollars, Kasumovich said. But since then "a significant position unwind" in those currencies has taken hold, lending the greenback some reprieve, he said.
------------------
... IBM achieved 70% of its 10% revenue growth due to currency gains from a weaker dollar. Eastman Kodak would have shown second quarter revenue growth of negative 5% instead of the 1% it did show had currency not been an issue. And of the double digit revenue increase (10%) from McDonald's in the most recent quarter, a full 60% of that was due to foreign currency gains.
------------------

.,.Sir Bound Spirit,
I think we all support your view and so I am wondering about that "implied ridicule" comment. Typo perhaps?
If you were taking courses in a non MBA program you might be shocked by the anti business propaganda in the other textbooks. It is rampant in colleges across the nation.
The mistake they make is they confuse greed as a business/govt issue when it is a human nature issue.
By not making the distinction clear enough, colleges turn out more negative leftists instead of more that have a recognition of the massive opportunities available in the business world.
Instead, the grossly overpriced "education" horribly burdens the young people these days with massive permanent debt. Not to mention the credit card debt kids take on because college life is so unaffordably expensive.
---by the way, why not be a nurse? They will have work in a depression.

Unless wages can keep pace with inflation, the nominal value of a house will have nothing to do with it's selling price, especially if there are bank repos for sale nearby.
------
The 10 yr t-note has now confirmed a bottom.
------
(Here comes the 500 year mortgages)

"Washington Mutual and J.P. Morgan Chase & Co. are offering 40-year mortgages in some markets, up from the conventional 30-year terms, to reduce payments as home prices rise. The share of home loans lasting four decades rose to 3.2 percent last year, double the percentage in 1995"
..."24 months of no-interest financing on computers"
..."Ethan Allen Interiors Inc., a furniture maker with more than 300 stores, is offering five-year loans for living room furniture in Sunday newspaper sales circulars."
..."To reduce monthly payments so lower-income buyers can afford new cars, auto dealers sometimes need loans as long as 84 months, said Jerry Chambers, a Bellingham, Wash., Chevrolet dealer."

I read somewhere (can't remember the source) that during Great Depression 60-year real estate loans were not uncommon. Will history repeat itself?

@ Bound Spirit : I, too, started a Masters after 20 years of engineering (MS Engineering Management) thinking it would improve my career. After 12 hours of courses (4.0 GPA, boast, boast !) I realized that what I was really learning was how to study again. I wasn't terribly interested in becoming an engineering manager, but the course on business finance for no-business majors was an eye-opener. I discovered that I had had a latent desire to find out how the financial world ticked for many years - it was just a question of being fed a relatively small amount of information with which to form a basis for expansion to other aspects of finance and economics.

Three years on, I have still only completed 12 course hours, I have left the datacommunications equipment field for medical electronics (because I saw the writing on the wall) and have started my golden nestegg. The bottom line is that education doesn't often give you exactly what you are expecting, but usually gives you something new. In your case (and yes, I remember reading something as trite and facile as that about the US debt), you have found out that the majority don't think like you. (Actually, being an engineer, you knew that already !!) And a more useful excercise is to think out an exact rebuttal to see where the holes in your understanding are in all the points raised in the text. But first spend 5-10 minutes getting the 'A' grade !

@ 21Mabry. 'I just grinned and bared it'. Do tell ! What did you bare ? And was it in class ? Just ragging.

C!

@Dollar Bill. I am a new member of this forum, but I am guessing that I may be the only "leftist" here. I found the classroom text snippet posted by Bound Spirit to be an example of sloppy scholarship, not leftist ideology. The idea that some people have of leftists being people who like to waste money on government programs and cause deficits is not accurate. Those who do that are simply politicians.

I was reading "America's Deficit, the Dollar and Gold" the other day from the World Gold Council. (It can be found at http://www.gold.org/value/stats/research/pdf/rs%2028%20congdon.pdf.) I believe it identifies and tracks the real causes and effects of deficits during US history --to empire rather than a particular ideology.

Today not just one but TWO articles on gold in the FT. Is this a trend we are starting to see?

The first is on an Edinburgh goldsmith who will

snip

...create a unique batch of 250 pieces of pure Caledonian jewllery after chancing on one of the biggest known consignments of Scottish gold, which is so rare it can command four times the standard gold price...

...obtained the 400 grammes of gold from an eccentric, gold-panning enthusiast who claimed to have seived the chilly waters of every gold-bearing river in Scotland.

The cache of gold, worth �25,000, is an enormous haul given that most Scottish gold panners are lucky to find more than a few flakes or nuggets in a lifetime.

end snip.

Apparently the individual who panned the gold wasn't intersted in keeping it, (despite having spent some 10 years finding it), but refused to part with his meticulously kept log book detailing where it was found.

The second article is typical reporting:

snip

The amount of gold "short" positions remaining on producer hedge books showed a significant decline in the second quarter of this year, a trend that is one of the main factors supporting bullion prices...

...gold miners brought back or closed out 5m ounces, or 156 tonnes, of gold in the three months to June bringing the total amount unwound to 8.77m ounces so far this year, according to the latest quarterly survey by Virtual Metals and Haliburton Mineral Services.

...over this 23 month period the gold price has risen about 30% to about $350.

end snip

No effort made to investigate the reasons why the gold producers are the biggest buyers, and no suggestion that the 30% rise in gold over the last 23 months is pretty good compared to equity returns.

Have to start wondering, even though the obvious conclusion is not stated in these articles,if any of the sheeple reading this will ever put two and two together and get the figure of $3,000 an ounce.

http://biz.yahoo.com/rm/030808/markets_precious_comex_1.htmlMore on Gondolin's post re reduced hedging. From Reuters.

snip

The market was also encouraged by the trend toward less forward selling by producers and intentions to unwind hedges and sell more gold spot by such mining giants as Newmont (NYSE:NEM - News), AngloGold (ANGJ.J) and Placer Dome (Toronto:PD.TO - News).

The Gold Hedging Indicator released by Halliburton Mineral Services and Virtual Metals Research Thursday showed forward sales of unmined gold by 88 producers accounting for 67 percent of total gold mine output fell by 5.0 million ounces to 73.2 million ounces in the second quarter of 2003

I saw you approach the TableRound and heard your remarks, Sir Remarx, but was SOOOOO busy thinking about all the things that I have yet to do, that I missed welcoming you at that time !
GREAT HANDLE !
<;-)

Decline, not declline. Eyes not what they used to be.

Thanks for the late evening work, T.C.
PIIINNNNNNNNNGGGGGGGGGGGGGGGGGGGGGG !
<;-)

http://focus.comdirect.co.uk/en/detail/_pages/charts/main_large.html?sSymbol=GLD.FX1JUMP SPOT, JUMP !
<;-)

http://www.usagold.com/gildedopinion/Congdon.htmlA while ago we had received permission from Mr. Congdon and the WGC to republish his commentary at 'The Gilded Opinion'.

An excerpt:

A vital question raised by the USA's external debt and deficits is, "can the dollar remain the world's dominant currency, and in particular the favourite asset in government holdings of foreign exchange reserves, while the USA continues to build up external liabilities at the recent rate?" Further, if the dollar's pre-eminence is weakened by the USA's external imbalances, "what other reserve asset can compete with it?" These questions have become more relevant with the introduction of the single European currency, the euro. Several leading European statesmen have said -- openly and in forthright terms -- that one aim of the euro is to supplant the dollar as the world's principal currency.

Are the USA's large external deficits a sign of a weakening of anti inflationary resolve? Do they foreshadow a collapse in the dollar? And would a collapse in the dollar not only benefit the euro's international prestige, but also renew gold's monetary role?

--------by Professor T. G. Congdon, CBE. Congdon is one of Britain's leading economic commentators. He was a member of the Treasury Panel of Independent Forecasters (the so-called "wise men") between 1992 and 1997, which advised the Chancellor of the Exchequer on economic policy. He founded Lombard Street Research, the City of London's leading economic research and forecasting consultancy, in 1989, and is currently its Chief Economist. He has recently been appointed to a research professorship at Cardiff Business School, where he will be writing a book on The Monetary History of the UK, 1945 - 2001. He is also a visiting professor at City University Business School. He has written a number of books on monetary policy, contributes widely to the financial press, and makes frequent radio and television appearances. He was awarded the CBE for services to economic debate in 1997.------

An executive summary is also available above the table of contents, which you will find if you click the url above.

R.

Not to single you out, but your 106901 struck me as one of the finest little posts I have seen all week. I would say it assays out at .995. Thank you.

R.

PS. to Gandalf. Thanks for noticing. All just part of a day's work.

http://www.usagold.com/gold-coins.html

GOLD TODAY! Because you never know what the weekend will bring.

Aw, gosh ... now you've gone and made me blush ...
C!

Gandalf, et al. Thanks for the welcome. Hope to contribute some constructive thoughts myself sometime down the road, but at this point I am still in the absorbing/learning phase. This forum has been a great resource.

Welcome to the forum whatever your political persuasion. I am conservative but have come to realize that both of our major parties and their respective factions, left center and right, have thrown away any sense of fiscal or monetary restraint. For example the US House has only one (out of 535) devout monetary conservative, Ron Paul, willing to consistently stick his neck out for monetary and fiscal restraint. He's a republican but that's probably a flag of convenience. I can't think of anyone in the Senate with similar views.
My point being that the number of folks in the "goldbug" category is miniscule, maybe one in a thousand or less. As a follower of this forum I'm not much concerned with social/political views expressed here because that is mostly off topic. What does bind us together, left and right, is the sense that the US is going off the deep end financially and will shortly come a cropper.
Cheers,
Boilermaker

a while ago! 84.96. Backed off a little now.

Thank you. Well said. I couldn't agree more.

Test

http://finance.lycos.com/home/livecharts/default.aspLYCOS had the Dec Gold Settlement at $359.7 today -- BUT as the high for the day was only $359. -- they decided that it was wrong and changed it to $357.9 !
==
BTW -- it looks as if the Crystal Ball was seeing well as of last Friday --- BUT, it may need a SLIGHT ADJUSTMENT !
--
Gandalf the White (08/01/03; 18:18:13MT - usagold.com msg#: 106631)
TGIF === Question for the week end . <;-)
--
Question -- How many think that the Crystal Ball is correct and that by the end of next week the POG is closer to $370. than $340. ?
---
WELL, $356+ is closer to $370 than $340 !
Wait until next FRIDAY !
<;-)

http://biz.yahoo.com/rc/030808/markets_gold_index_1.htmlNEW YORK, Aug 8 (Reuters) - Seeking refuge from an imploding bond market and troubled dollar, investors are piling back into the gold sector, driving shares in pure-gold-play mining stocks Friday to their highest levels in more than six years.

..."The stocks are telling you that gold should do something," said Caesar Bryan, manager of the $210 million Gabelli Gold Fund. "People buying the equities clearly think that the gold price is probably going to make some progress."

Gold was the winningest stock sector in 2002 and remained a darling this year, as nervous financial markets favored hard assets while the United States went to war in Iraq and the economy teetered on the brink of recession and deflation.

Bullion rose to its highest price since 1996 in February. While its current price around $357 is off some $31 from the $388 peak, there has been no sustained let-up in interest.
-------(from url)-----

Even as gold mining stocks are reaching new highs, remember, to properly diversify a paper-dominated portfolio of corporate shares and bond securities, the tangible yellow metal is a necessary part of the mix.

Call the friendly and knowledgable staff at Centennial to discuss an acquisition strategy for hard assets that meshes well with your financial goals. Ask for George, Jonathan, or MK. Get off to a warm start and tell them how much you enjoy the forum, and let the conversation flow from there.

(800) 869-5115 (ext 100 -- to have your call directed)

R.

http://www.usagold.com/DailyQuotes.htmlexcerpts:

Gold held overnight strength on physical demand and reports of producer dehedging. The Gold Hedging Indicator, produced by Haliburton Mineral Services and Virtual Metals Research, said the reduction in the gold industry's hedging activities showed little sign of coming to an end. Analysts, who had cited de-hedging as a major support for the gold market, said that producer buy-backs could continue to feature. "The latest bid by AngloGold for Ashanti, for example, and the declaration that in the event of a successful merger Ashanti's hedge book would be reduced, suggests de-hedging will be with us for the foreseeable future," said HSBC metals analyst Alan Williamson.

Chief technical analyst Peter Lee and his team at UBS declared the precious metal was "within the consolidation phase of a new secular bull market." The UBS technicians, joining several other major investment banks in their growing enthusiasm for the metal, said, "it looks as if a breakout above $375 an ounce is the key to unleashing another bull run from the metal. If such a breakout should occur, we would be looking for targets first toward the $425 zone, then closer to $500."

see url

http://allafrica.com/stories/200308080286.htmlHEADLINE: African Gold's Zimbabwean Nightmare

Mineweb (Johannesburg) August 8, 2003 -- Describing in graphic detail the severe difficulties of operating a gold mine in Zimbabwe today, John Teeling, chairman of AIM listed African Gold reports: "A reduction of 15 in the workforce during the year highlights an appalling problem - death from TB, malaria and Aids. Only three of the 15 resigned. The others died. HIV and poor nutrition make TB and malaria lethal."

As African Gold's Inez mine, 25 kilometres east of Kadoma in central Zimbabwe, employed 95 people at the start of the year, this indicates that 12.5 percent of the workforce died during the past 12 months.

Teeling, an Irish entrepreneur who is involved with a number of natural resources companies, says Inez's 80 direct employees support about 500 people in the mine village. "Alternative employment opportunities are non-existent."

Describing the day-to-day problems gold miners face in Zimbabwe, Teeling says: "Our 200-ton per day facility is operating at about 10 per cent of capacity.

During the year we had power breakdowns, a little civil unrest but our principal problem was a breakdown in our small mill. We affected running repairs, which failed, and then suffered a three-month loss of production while we waited for parts to be cast, milled and cut.

The initial price quotation tripled in three months. We adapted. The big 200-tpd mill was pressed back into service working intermittently to mill the ore coming mainly from the North shaft - a small high grade deposit. The other two underground operations, East and Main, are in mothballs."

He asks: "Can we survive in Zimbabwe as it falls into economic chaos? It is now a classic case of hyperinflation. By year-end 2003 inflation may be running at a rate in excess of 600 percent. Wage rates are raised on a retroactive basis. There have been two rises of more than 200 percent each in the past year. Power is intermittent and the price rises monthly. Fuel is available but often at black-market prices."

Teeling says the mine is scarcely covering local direct cash operating costs.

Teeling says the company is persisting in Zimbabwe because, "Zimbabwe has gold. It has an educated workforce, reasonable but crumbling infrastructure, good laws when fairly applied and great potential. It has a future and we want to be part of that future."

He warns, however, "we cannot survive forever waiting for Zimbabwe to come good. Our finances are weak. The company is being financed by frequent small [share] placings, mainly with directors."

Teeling says the outlook for gold is looking good and African Gold is seeking other projects, principally in West Africa. But this is a difficult process and "so far we have seen nothing to recommend. Some look good on first analysis but the need for substantial infrastructure expenditure on roads, power and water mean that good grades and large tonnages are needed for viability."

Nevertheless, he insists: "We will stay in gold, stay in Africa and stay in Zimbabwe. There is potential in gold in Africa. We will continue to look for profitable opportunities on the continent."

--------(from url)------

The next time you pull out your pot o' gold for the satisfaction of a "once over", be sure to contemplate likely scenarios of its history, and appreciate the fact that it didn't fall from the sky or roll off of a high-speed printing press under the supervision of a political task master.

Hey, it's Friday, ok? Now call Centennial and enter the weekend on a high note.

R.

http://quote.bloomberg.com/apps/news?pid=10000082&sid=a6oMH2u_Cgks&refer=canadaAug. 8 (Bloomberg) -- Gold futures in New York rose for a fifth straight day as the breaking of a technical price barrier spurred more buying by investors who base their decisions on graphs and charts.

Buy orders were triggered as prices rose above $355 an ounce, the 50-day moving average for the December gold contract, traders said.

...The last time prices broke above the 50-day moving average, on July 23, the rally accelerated and gold rose to a seven-week high of $369.70 an ounce on July 28.

...Prices have climbed 15 percent in the past year.

-----(see url)------

As an investor you have a choice. You can trade with leverage on the value of a contract, each such device carrying with it a germ of admin risk (rule change and counterparty default); or you can acquire the metal and own the lasting universal value of portable property, free of any admin risk.

As you structure your portfolio, always remember the primary reason you sought gold -- to diversify and thus hedge your exposure to financial crisis and counterparty defaults. You can't effectively hedge paper risk with more of the same. Hence, metal -- the right tool for the right job.

R.

http://biz.yahoo.com/rf/030808/markets_fed_openmarket_1.htmlNEW YORK, Aug 8 (Reuters) - The Federal Reserve said on Friday it added temporary reserves to the banking system through over-the-weekend system repurchase agreements.

------(see url)----

In open market operations on behalf of the System, the trading desk at the Federal Reserve Bank of New York signaled that the Fed's easy monetary policy could accept things a bit easier today through a $1.75 billion repurchase operation for the weekend's duration. Given bids to entertain in Treasury collateral ranging only from 0.80 - 0.91 pecent, the Desk opted to see a deal done, though doing so (at an effective rate for the add of 0.908) undercut the current FOMC's directive to target a fed funds rate of 1.00 pecent.

So, what's in a target? Seemingly more psychology than substance.

Stick with gold. Mother Nature does not play these games, and there is no such thing as an "easy gold" policy. That is, unless you are fotunate enough to buy while the prices remain user friendly (except to your mail or FedEx carrier on Cenmtennial's shipment days).

R.

Remarx, I am far left on some issues and far right on others and everywhere on the political spectrum in between.One thing I am agains is totalitarianism from the left or the right in essence I always refuse any attempt to be labeled.Stand by your beliefs and be true to yourself varied opinions makes for great debates.Clink maybe I should have bared the moon in the daytime during the discussion of the FED.If anyone wants to read a good book get Homage to catalonia by Orwell great first hand account of spanish civil war

A couple of points on the FED actions.

Today, they actually drained reserves from their outstanding pile of repurchases. The level
of outstanding REPO's has been cycling lower and lower over the past month, its very very low now going into the FED meeting.


< http://www.bullandbearwise.com/FOMOOutChart.asp >

WE have not seen a bond purchase by the FED since 5/15, and they renege'd on their promise to purchase some due to the deflation threat.

The FED funds futures have been creeping ever higher, signaling that easing is over for now. For the longest time they sold at a discount to the current. No longer.

http://research.stlouisfed.org/publications/usfd/page9.pdf

This last week, the money stored in the NAS tank was reduced, while the broader market
held up flat. The FED seems to be tightening a bit, trying to edge the money into notes and bonds without doing so themselves.

Next week is going to be exciting. We get the trade deficit numbers which could prove shocking. On the
back of that the PPI/CPI. While imports are keeping prices in check,
the US is losing solid mfg jobs and its threatening the tech jobs too, the US is running a trade deficit close to 5% of GDP, an unsustainable amount considering
we are also running a huge government deficit. IMHO we are close to the economic and political breaking point.

Will the dollar collapse?

Hey kids, what time is it? Yes, happy weekend! Bound Spirit: Thanks for the description of your economics class. You've made me feel better that I majored in Medieval History and avoided business and economic courses entirely. Where now are the past graduates who most successfully mastered all this Keynesian theory? Ah, yes, they're managing our country's economy and retirement funds.

21mabry: You asked, Is $5.00/ounce now a support level for silver? I don't believe so. POS was under $5.00 today and hit $4.91 at one point yesterday (Thursday). I would not be surprised to see the POS retest that old $4.80 level OR even venture below that. The basis for my optimism in silver is in the fundamentals of supply and demand. This may take some time yet but, for the life of me, I can not see or imagine how the POS will not move very much higher when these (now ingored or disregarded) laws become front and center due to a physical shortage of inelastic industrial supply sometime in the near future (year or three?). Perhaps, investor sentiment will drive the POS higher before this happens but I have no idea if this latest move over $5.00 is the beginning of anything big. As a trading event I used this "breakout" to buy back previously sold puts and then added some more. Considering where the POS has the potential to go, $5.00 is still incredibly cheap, so much so that buying physical appears as close to a "sure" thing as I've ever seen. However, I've been wrong in my lifetime more often than I can recall so study the facts for yourself and then decide. After all, I have no formal economic education.
Silver! More weight and volume per dollar. BC BN and Buy often
Happy weekend to all!
Rich

http://biz.yahoo.com/rm/030808/markets_precious_comex_2.htmlHEADLINE: COMEX gold surges, decouples from softer euro

NEW YORK, Aug 8 (Reuters) - COMEX gold rallied on Friday, as commodity trading advisors acted on computer buy signals and a move upward in gold shares sucked investment capital into the sector, dealers said.

"It's just technical. It looks like CTA/black box people were on the buy side as the price action over last few days has been pretty good, despite the fact the dollar had strengthened," said a bullion trader at a commercial bank.

Estimated volume was a modest 32,000 lots, with summer vacations thinning the market.

"If you get a close above $360.50, it kind of rekindles the upside, definitely, and I think we'd be off to the races," a floor broker said.

The euro fell to $1.1304/08 from $1.1376/80 late Thursday, making dollar-priced gold a more expensive buy for European investors.

But hoarders and fabricators from India and the Middle East have shouldered the interest this week, analysts said, paying higher prices and responding positively to a bit less volatility in the dollar/euro exchange rate.

"There's been some good Middle East buying all throughout the night and some good imports into Turkey lately," said Refco analyst James Steel. "And we had good trade and solid fund buying. The market looks quite firm indeed and did well despite the fact the dollar was up."

The gold rally pulled the rug out from September silver, which ended down 4.6 cents at $4.992 an ounce.

-----(from url)-----

A fair question for your consideration arises from that last line. In the event of a powerful gold rally (inevitably build on its unique role in the international monetary realm), would it act like a rising tide and lift all shiny white and grey boats, or would there be wholesale abandonment as the crews leap in to catch a direct ride on the singular golden wave?

There is a reason central banks and international institutions hold gold above any other tangible asset. As individuals, it would be equally wise to do so.

R.

i sense a far off rumbling and quaking in the distance

I have just today picked up my BEAUTIFUL 1 ounce Fine Silver for the price guessing contest. A sincere thank you, and a huge THANK YOU for your generosity in hosting these competitions - they are truly special! Cheers,
Waverider

Dollar Bill � Regarding the "implied ridicule" statement � put yourself in my shoes � I rarely post � and when I do � I send 7 full screens - three times. Then, the responses come. Each one entered three times. Now I'm the type of guy who got towel whipped by every SOB in every gym class, so when I saw all the triple postings, I immediately assumed you were all just taking turns with the towel. Then after Gandalf enjoyed his three lashings, Town Crier let him know I was innocent � so the whippings stopped. As a matter of fact, I only thought I was being whipped.

Although I was relieved that the triple postings were a simple force majeure, it was a bitter sweet vindication, because, by then, I had already revealed my tortured-youth-paranoid- psychosis through the "implied ridicule" remark.

Does that explanation make any sense to you or do you need a towel to get me to speak in plain freaking english!

Nomad � Stalin - Wow! Point taken, absorbed and incorporated into RAM for use in future debates when the inevitable "education is the key" mantra is employed to escape the reality of human nature.

Education is a strange animal isn't it? Is the piece of paper just a sign of endurance and commitment, or is it vocational, or is it a necessary prerequisite for democracy, or is it one path toward enlightenment? Who knows, and what's astonishing is that in my experience, few even try to answer the question? Most just go through the educational motions - as your father implied.

For me � education has taught me the limits of reasoning and the slippery slope of rationalization. I guess that's about all � the rest is just a fading memory of irrelevant ideas along with a strengthening and steadfast belief that intelligence (as opposed to space, time, energy and matter) is the fundamental essentiality of our existence.

Clink � I'll probably follow your same path. I'm not going to school for the grade or the degree, I'm going to get out of it exactly what I put in. If I discover that I can accomplish the same goal without the rigor of a class schedule, I'll surely log the experience and walk away. In the interest of full disclosure, one main reason for my return to school has to do with learning Chinese and Chinese culture � I feel like I have to purposely subject myself to the unfamiliar, lest I get too comfortable with my self avowed precepts. Studying economics has done that and led me here and I really like the golden view. What other enlightened worlds could I be missing? The Chinese people have recently emerged from Mao's cultural revolution � I'd bet they could teach this silver spooned American something about appreciation and I bet I could make some points about GAAP and the importance of business openness. I'm probably dreaming aren't I? Well, if nothing else I'd bet we could find common ground in gold and mistrust of government.

Thank you to everyone for your great advice and encouragement.

AFTER I saw my three postings I notified Townie of a potential PROBLEMO ! He replied to me that, YES, he was working on a BIG PROBLEM and that IT had produced the triple postings !
So, I was not your fault.
PS: I STILL, am not big enought to snap towels !
(I just urge my dogs, SPOT and SPIKE, to continue JUMPING !)
<;-)

http://www.financialsense.com/Market/wrapup.htm
Snippit:

On the commodity front, oil has remained over the $32 mark with a close today of $32.22 per barrel versus $32.31 last week. Natural gas has moved higher and popped back over the $5.00 mark to close at $5.04 per BTU, a gain of 3.4%. Silver lost nine cents per ounce, but the silver mining companies closed the week with some great gains. Gold remained flat through the auctions, but now we're ready to rock! Gold added $10.00 for the week to close at $356.20 per ounce and looks like it's building pressure for the next blast-off! The gold stocks finished the week nicely, with the HUI Index closing at 177.12 versus 162.63 last Friday.


Black Blade: My feelings exactly. Often movement in shares precede those of the commodity and the new highs in the gold indices is heartening. The higher energy prices must be tagging the earnings of every company on the planet not to mention the spending power of the consumer. Now that the Treasury note auction has passed with mixed results from the institutional interests the real action to come depends on how they perform on the secondary market when John and Jane Doe look to invest.


Snippit:

There was a time when borrowers looked at the total amount of debt that they were willing to carry, while today more people are focused on whether or not they can afford the monthly payments. The paradigm shift came somewhere back in sixties and seventies and probably had its biggest turning point when President Nixon removed the U.S. dollar from all ties to gold as an asset based currency back in 1971. Our dollar is now purely a debt based currency where money is literally borrowed into creation. I think American citizens got the idea that debts could go on ad infinitum and never have to be paid back as long as we are able to make the monthly payments. After all, we're only human. Why would we want to work for something if we can satisfy our wants and needs with credit? We take the lead from our federal government that debts never have to be paid back, just refinanced with cheaper dollars down the road.

This last week the government borrowed $60 billion to keep the boat afloat for another month or two. Of the $60 billion, it is my understanding that roughly $44 billion was used to refinance old government debt that came due and the balance of $16 billion was new money created into the system for the Feds to spend. They will be forced to borrow more next month, and the next month, and on and on. The deficits are getting out of hand and the rest of the world is taking notice. Foreigners are just about plugged to the gills with U.S. dollars. Our deficits are consuming most of the available capital inside the U.S. and the savings from abroad.


Black Blade: Precisely! And as more debt is accumulated more must be issued to service that debt too. It is a logarithmic event (consider it compounding interest if you must). Not to worry as this is mostly "off the books" accounting � similar to the illegal activities that various Wall Street investment brokerages, Arthur Andersen, Enron, Citigroup, JP Morgan Chase and others have been accused of). But I digress. The immediate signs are the current "competitive currency devaluations" or "Currency War" already underway. Foreign banks hold much of this debt as "reserves" believe or not. Their fear must be that eventually they will be holding mounds of paper built on empty promises. But then what do we care? They fell for it. It's got to be the ultimate con job.

http://www.iht.com/articles/105605.html
Snippit:

MEXICO CITY A dispute over the auditing of bad loans sold by four of Mexico's leading retail banks to the government after the 1995 banking crisis is reopening one of the murkiest chapters in the country's recent financial history. Prodded by Congress, the government agency that inherited $6 billion in nonperforming loans from the four banks in 1999 wants to do a careful review of the assets to see whether it is stuck holding credits that were not allowed under the sale agreements. The assets have now swelled to some $20 billion with interest, or about a fifth of the estimated total cost of the bank bailout.

Standard Poor's and Moody's Investors Service have estimated that the ultimate cost of the bank rescue could reach $100 billion once interest payments are included - more, as a percentage of gross domestic product, than the savings and loan crisis in the United States in the 1980's. That figure covers a hodgepodge of programs that policymakers came up with as the banking crisis deepened after 1995. Along with the purchase of bad loans and debtor relief plans, the government also took over banks that collapsed under corrupt or inept management. Many members of Congress believe that opening the ledgers will show how bankers lent money to their wealthy friends and then passed on the losses to the government.


Black Blade: here we go again. Back to square one. Can you say "Brady Bonds"? I knew you could.

http://story.news.yahoo.com/news?tmpl=story&cid=1518&ncid=1518&e=5&u=/afp/20030807/bs_afp/us_economy_rates_030807070018
Snippit:

WASHINGTON (AFP) - The red-hot US housing market, one of the mightiest pillars of the economy, risks buckling under the strain of surging long-term rates, analysts warned. The sheer speed of a recent rise in yields on US government bonds, or treasuries, threatened to interrupt an orgy of spending based on cheap long-term credit, particularly for housing finance, they said.

The increase in interest rates was particularly troubling because the economy appeared to be unusually vulnerable to interest rates, he said. "While corporations have been able to stop the growth in debt, consumers have been on a low-rate debt binge," Harris said. "The biggest risk is to housing and housing-related activity, which is already beginning to slow." In the past two and a half years, the slump in US mortgage rates has triggered a boom not only in home buying, but also in re-financing of existing mortgages. Home owners secured lower interest rates, pocketing the savings. Many also used the low rates to take out extra credit, based on rapidly rising home prices. The overall result was a significant boost to household incomes, and the economy.


Black Blade: I suspect that rates will rise further diminishing demand once the rush of latecomers runs its course for new and used home sales. Meanwhile the Refi market appears to be finished. As consumer spending is two thirds of the economy it looks grim. Wall Street is now grasping at straws for explanations for an "economic recovery" and now the latest buzz is "Child Tax Credits". Hmmm�

http://money.cnn.com/2003/08/07/pf/yourhome/worstcase/index.htm
Will rising interest rates unravel all of the gains of the recent housing boom?

Snippit:

BEND, Ore. (CNN/Money) - Yeah, yeah, yeah. Interest rates have been going up. But you've locked in your low rate. Why should you care? John R. Talbott, a visiting scholar at UCLA's Anderson School of Business and author of "The Coming Crash in the Housing Markets," has a thesis that will leave you quaking from behind your picket fence. He describes a worst-case scenario in which rising interest rates drive down home prices, leaving an alarming number of homeowners -- particularly those who've cashed out or borrowed against their equity -- holding more debt than their house is worth. If they sell, they would actually owe money. Under this scenario, foreclosure rates jump as high as 5 percent, pushing down home prices and wreaking financial havoc all the way to the top of the housing food chain at Freddie Mac and Fannie Mae. With the collapse of these financial behemoths, investors would lose money, taxpayers would be stuck paying for a bailout and confidence in the banking industry would be as good as gone.

And your home? A 30 percent drop in home values isn't inconceivable, said Talbott. "It's 1929 all over again," said Talbott, a former Goldman Sachs vice president. "This is big Depression-type stuff." Talbott's theory sounds a little over the top. But considering the housing market's run, it's not unreasonable to think that fortunes could be lost just as quickly as they were made. Talbott contends that the relationship between rates and home prices is almost linear. In other words, a 30 percent increase in mortgage rates (from, say, 5.5 percent on a 30-year mortgage to around 7.5 percent) could mean as much as a 30 percent decrease in home prices. Others argue that the relationship isn't quite as direct. For one, when rising rates go hand-in-hand with an economic recovery, as they often do, better job prospects partially offset the effects of higher rates.


Black Blade: Those who disagree apparently don't know that this is a "jobless recovery". Pretty much the scenario I've put forward before though. As said above: "This is big Depression-type stuff." Yeah, I think that the glut of housing, rising rates, rising unemployment and another equities decline will just about sap Main Street investors after having been reamed in the last equities market blow off (to the tune of $5.5 trillion). As always, get out of debt and stay out of debt, cash enough emergency cash for several months� expenses, accumulate gold and silver portfolio insurance, and start a storage program of nonperishable food and basic necessities.

There was a post on the forum some months ago about some state that has some law where companies can set up thier own banks. Merrill Lynch and Citi I believe were a couple that were mentioned. I read today that Merrill uses its own bank to support its bond traders in thier positions.
After the recent bond scare with spooky comments by numerous
financial figures, and some definately wrong analysis by sinclair, I personally am not worried about the bond bubble after recent readings, at this time.
I am resigned to what is comeing down the road, and this quote just below, by someone in 1933, says it real well.

"It came with a kind of surrealistic slowness�so gradually that, on the one hand, it was possible to live though a good part of it without realizing that it was happening, and, on the other hand, it was possible to believe one had experienced and survived it when in fact it had no more than just begun."
--John Brooks about the 1929-33 experience

It should be noted that China's banks are awash in debt and nonperforming loans, many of them from state-owned enterprises with no hope that they will ever be repaid, and more from equally feckless bust private companies. Whether the banks can manage the transition to a clientele unused to consumer debt and likely to get in over their heads without proper banking supervision remains to be seen.

Maybe it is just fatigue of the weeks readings, but I think my new focus is going to be, prepareing for uglier days.
The central bankers may keep gold bottled up for decades, but meanwhile, the regular folks are really going to go through hell. We are spoiled to say the least.
Personal planning for leaner meaner times is called for.

A New Member to Our Ranks I saved this for the weekend.
Just when you think that noone is listening it happens. Yes, The Fool on the Hill has made a connection. A dear friend of mine for many years has made the leap of faith,after many months listening to me preach the Gospel Of Gold.
He stood in the shadows listening. Sometimes asking a question or two,but always there to hear what I was saying.
Finally, he asked if I would help him buy gold. We did. A few coins but none the less a start. Am I excited? You bet. He has just brought a new computer and I can not wait to introduce him to the GREAT MEMBERS of this Forum. Inso,I would like to Congratulate all at this Forum for making this possible for without your informative veiws, my friend would still be under the influence of the DARK FORCES. We have one more Goldbug to take an ounce at a time from the market and he will be better prepared for the future.
Slingshot------------------<>

Dollar Bill.There's an article on the prud bear logger about Ford offering money market funds. They use the money for making car loans. (Actually I shouldn't wonder they use the money for writing credit derivatives on car loans... but that's just my sick imagination).

The post on the tragedies taking place in Zimbabwei struck home with me.Last semester I had a development in the 3rd world class,the prof. used to work for the world bank and had worked in africa.Mugabe has been expelling the white minority farmers from their large land holdings and breaking up these estates.The land is not going to the common people it is being given to Mugabes family and friends.The white minority fled the country and took their farming know how with them,Zimbabwei once Rhodesia used to export food now they are in a midst of a famine.I am in know way supporting the past minority white rule it was racist and wrong,but now the Mugabe goverment has bit its nose off to spite its face,the loss of their entrepernurial class and large scale white farmers has doomed many innocent people in that country to starvation.21

It is truly mans inhumanity to man. An overwhelming desire to purge or irradicate all traces of the past ruling class.
Wether if it was benifical or not. China had its Mao and Cambodia,Pol Pot. Vietnam had its own purge of whom I know not who was respondsible. Very sad indeed.
So TownCrier's post Msg# 106922 should remind us not only of the Human Factor in its relationship to Gold, but the Governmental Decrees which can be imposed such as in Zimbabwie.
Slingshot---------<>

That should be Msg#106921
I read all your posts TownCrier.
Slingshot------------<>

http://nachrichten.boerse.de/anzeige.php3?id=68cc406cAfter Bernd Niquet insulted earlier this week gold and silver bugs for being "crazy nomads"
http://nachrichten.boerse.de/anzeige.php3?id=688a8578 ,

Roland Leuschel was advising, yesterday Friday August 08, on the same boerse.de site to systematically increase the gold part of your portfolio as shares may collapse.
SNIP:
Ansonsten erh�hen Sie systematisch Ihren Goldanteil Ihres Portefeuilles, und warten Sie auf die kommende Aktienkorrektur, sie k�nnte deftig ausfallen.

Black Blade:
I am a former investment advisor who has been in gold and gold stocks since 1970. I have been following the world economic destruction now for over thrity years. I have a question that I have wrestled with all that time and still have not been able to come up with an answer that I am really comfortable with. It appears to me that the final resolution can be both deflation (falling prices) and inflation (rising prices) at the same time. For example falling housing prices, rising precious metals,commodities etc. The dilemma for me comes when I consider the fact that the U.S.,in a serious monetary crises, where the dollar is experiencing a loss of confidence, would be perceived as unable to pay it's obligations with anything but printing press dollars. The bond market as well as the stock market would crash along with Ginny Mae and Fanny Mae. The dollar would fall dramatically, as well as real estate. All of this would happen very quickly. This situation, left alone, it seems to me, would result in a cash is king situation due to the deflationary factor. There would be distress buys in housing and all personal property of a distress nature. At the same time there would be foreigners with dollars and their own currencies and credit plowing them into the US for everything of value. The solution I see to all this, is that the moment the government senses this probibility, they will act to create a new monetary system before it gets out of hand. That's as far as I wish to take this. Part two, of course would rest with the type of new monetary system adopted. My question to you is, what am I missing? Also,what pecentage of cash in relation to total assets should I keep? Some expect that cash will be king, just as it was after the crash of 1929. I firmly believe that gold is an absolute must right now, and not the 5% nonsense that wall street advises. I am heavily invested in gold and gold stocks, but I am worried that I may have too much cash.

http://www.washingtonpost.com/wp-dyn/articles/A36332-2003Aug8.htmlSnip:

State pension funds from Ohio and West Virginia, aided by well-known private trial lawyers, filed court actions yesterday against mortgage lending giant Freddie Mac and three ousted executives, accusing them of securities fraud because of accounting errors the company recently admitted.
..............
"Freddie Mac is obligated to follow certain accounting standards, and they did not," he said. "This is securities fraud."
************
Misetich

Greetings and salutions to all-

The blame game has began in earnest as pension fund managers, politicians jump on the bandwagon and "blame" securities fraud for their poor decisions- Its only the beginning

All On Board The Gold Bull Express

http://www.washingtonpost.com/wp-dyn/articles/A36361-2003Aug8.htmlSnip:

Pillowtex, maker of Cannon and Fieldcrest towels, filed for bankruptcy protection last week, dismissing 6,450 workers -- including the Bennetts and nine of their relatives -- in the largest single-day layoff in North Carolina history.
.............
Here and across the country, the storied textile industry -- which plucked generations of farmers from their fields and lifted many to the middle class -- is vanishing as Americans snatch up better bargains on imported goods. So far this year, the mills have lost 29,000 jobs, triple the number lost by the same time last year, government figures show, leaving just 448,400 -- half the number that existed in 1970.
***********
Misetich

Sad - really sad to read how the common folks are trampled by globalization - North American jobs have and are being exported worlwide

All On Board The Gold Bull Express

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1059478838762&p=1012571727088Snip:

Bond market volatility could force the closure of some hedge funds, one of the industry's leading practitioners warned on Friday.


"Some funds will close, not because of these issues per se but because investors are upset about the drops in returns and will redeem money," said David Smith, chief executive officer of GAM's fund of hedge fund business
..............
"The July numbers are just coming through and a lot of people lost money, they are all suffering," said one prime broker. "Lots of hedge funds have lost 5 to 7 per cent in the macro and fixed income space, with some down 10 per cent."

****************
Misetich

The unravelling continues - lets stay tuned and make room on our Gold Bull Express bandwagon - instincts say we will be joined by quite a few more investors as the clamour to add insurance to their vanishing portfolio

All On Board The Gold Bull Express

http://www.reuters.com/financeNewsArticle.jhtml;jsessionid=ICSR0BDRQVD0GCRBAEKSFFA?type=bondsNews&storyID=3248173Snip:

WASHINGTON, Aug 8 (Reuters) - The blame game in the wake of the bloodiest U.S. bond market rout in nearly a decade is in full swing and many of the fingers are pointed at the Federal Reserve.

Accusations are flying that the central bank overplayed its concerns on deflation in a manipulative effort to push long-term interest rates lower to goose the economy.
...............
"Price action in the last few weeks reveals that the bulk of the pupils flunked the mid-term exam," economists at Credit Suisse First Boston wrote after Greenspan's testimony. "When the bulk of the pupils fail the test, we are inclined to assign considerable blame to the teacher."
............
Misetich

Perhaps the most salient comments came from former Fed governor Lyle Gramley who is quoted in the same article as saying " The Fed is in uncharted territory here, so is the market, and trying to communicate the message and getting it correct is inherently very difficult in these circumstances," he said.

It was Robert Rubin - where are thou?!- who inititated the phrase "uncharted territory a few years ago" commenting on the effect of a deflating sm bubble

As the losses mount - and the followers discover - the captain has steered them in "uncharted territory" with high financial storms, and perilous bergs, such as derivatives, bonds, gold, currencies, unfunded pensions, and undisclosed frauds, losses, debts, and manipulated income statements and balance sheets -

Eyes are bewildered - where to turn next? Stocks? Housing? where to? which way out? -

Perhaps they will discover that Captain Greenspan & crew, the US Treasury have been deceiving them for years - and they will turn toward the opposite of what they have been following and preaching - by dumping US $ denominated assets and buying Gold - Physical Gold

All On Board The Bull Express

http://www.usagold.com/cpm/abcs.html

The ABCs of Gold Investing

"If you are looking for thorough guidelines for making good decisions about private gold ownership, The ABCs of Gold Investing has all the answers." --Money World Magazine

Please Remember: It is your purchase from USAGOLD - Centennial Precious Metals that nourishes these pages.

Thanks for the informative posts though very sad. I am interested in the thoughts of forum posters on the following question;

Do you think the American government could have crafted policy over the last twenty years that prevented or slowed this devastating trade deficit and resulting job loss?

I believe our elected officials promoted it. I'm convinced this unravelling and fading of America as MK put it, is not an accident, but a planned sharing of the wealth crafted by deal makers. Deal makers we elected from both parties with little regard for generations of American investment (Blood Sweat and Tears!!) in this great country!

Our best jobs (national security) are being handed to our enemies on a platter!

Going to see where some of the family started from next Sat. The UK, Scotland and Ireland.

Will be on the lookout for those wee green lads and see if I can bring back to Texas a pot of their stash.

Any "must see" suggestions from anyone?

In what has been the hottest markets, even more than a 30% drop is, I believe possible, and likely. Remember, when you see those graphs of declined RE values, they are averages - some losses are actually less, some more. The 1990's saw some sectors experiencing > 50% drops. When the herd is running at something full speed (mania), it's best to step aside, get out out the way. I had to learn that the hard way.

On another note,
I've read repeatedly that one should stash cash. This brings up a question. If worldwide, people decide to abandon their dollar holdings, due to a drop in the dollar, why would it be good to have a stash of cash (dollars), when the dollar is losing confidence across the board? Wouldn't it be better to have your holdings in gold or silver that could be sold off into cash when needed?

Thanks.

Re: msg#136937
Congratulations on your friend's successful conversion to gold. I hope he enjoys the history and beauty of the hobby and the broad experience and venerable wisdom of the gold believers. Whether through yourself or this forum or a local dealer or coin club, antique center, jeweler, banker or elsewhere, he has the opportunity to learn and continually develop money and life management skills crucial to family, civil society and community.

Glennh10-
Yes, it is better to have metal that can be traded into cash as needed, because, as you say, the dollar holdings are being distributed and dishoarded and devalued.
But spotlight is correct that some diversification is prudent. BB and others would likely agree and that there are various scenarios that one should prepare for.
So, knowing that it is better safe than sorry, hold as much cash as you think you need to pay your (and your family and any needy friends, neighbors and relatives you take any responsibility for)living expenses:
1) Banks can close. No one knows how long a bank holiday or closure would last or whether it would involve limited numbers or broad-based closures or insolvencies. But a few weeks to a few months cash for expenses is a common strategy despite the generally benign experiences of Y2K.
2) FDIC insurance is inadequate to cover more than 4% or so of all U.S. savings deposits.
3) Many banks would not have immediate access to coin and currency after there limited local inventories are depleted by customer withdrawals. Ditto, ATMS.
4) U.S. 40% silver half dollars(1965-1969 and rare 1970)
provide cash AND bullion exposure. Their current premium above face value for purchase is currently very small allowing them to be spent at face value if necessary with very little downside or loss.

Guided's question:....

"Do you think the American government could have crafted policy over the last twenty years that prevented or slowed this devastating trade deficit and resulting job loss?"

I can not think of any way to protect market share of domestically produced goods from cheaper foreign imports other than by imposing tariffs on the imports. High tariffs usually beget retaliatory tariffs, all of which does not promote productivity but does promote isolationism. If this course had been taken the country would probably now have a much smaller trade deficit since exports and imports would be more limited to those items or materials that each country must have but does not produce. Egypt would still import the wheat they need each year but can not grow and the USA would still import the bananas and coffee which we can not produce. Would this be a better situation than what has evolved?

Would this have limited the market for American made items to only American demand? Would such a policy have resulted in a balance of trade instead of an unlimited supply bought with debt? Would tariffs on imported silver have resulted in a higher POS and thus allowed domestic producers to remain in business? When advances in agriculture made possible enough production from fewer working directly on the farm, then workers were available for manufacturing, teaching, the arts, etc. Now that manufacturing jobs have been exported, will new avenues of enterprise appear or have we permanently increased the number of un and under-employed? Perhaps this an individual choice.
Rich

New jobs do naturally appear to replace those lost. Some that I can see are producing specialty and organic crops and herbs, fruits or nuts, baking, candy/jam/condiment making, organic textiles(hemp and cotton), pottery, weaving, metalworking and other crafts, wood cabinetry, carpentry and toy manufacture, consulting, local banking, various local "services" and minimally regulated/taxed small-scale manufacturers. Many examples can be found in communities using local SCRIP currencies. Hard-money dealers and colectible, antique and hobby stores are growing in my area.

I personally feel that government failure to curb the enormous power of union activity over perhaps forty years, has increased labor costs to a point that we are much less able to compete. Gains in transportation and communications technology would have caused some movement overseas anyway, but perhaps much less. Ironically, I understand that he Japanese now suffer from many of these same problems.

The rise to power of government agencies such as EPA, OSHA, and others have caused,IMHO, increased domestic costs that make it easier, perhaps necessary, for an owner to padlock his facility and move. Or just go out of business.

We may learn from a bad example in California, where I see reports of near 6% premiums for worker's comp coverage. If that is true, I fail to see how anyone can prosper out there.

Just listened to an address from a fellow who imports furniture from China--he says their workers get three hots and a cot and $1 per day--and save some of their money! Not very fair, but that is the competition.

So, if I had a worn-out factory in the USA, high taxes, higher regulation, and a union that said I was their enemy even though my signature was on their paycheck every week--I just might take a look at operations elsewhere.

Not that some of this was not going to happen anyway--but we have speeded the precess unnecessarily, IMHO.

BUONGIORNO!

Guided: Your question--"Do you think the American government could have crafted policy over the last twenty years that prevented or slowed this devastating trade deficit and resulting job loss?"

I am by no means an expert here, but I'll offer an opinion and back it up, best I can. YES, the massive trade imbalances that we see today and our subsequent dollar trade deficits and resulting job losses could have been far more controlled, IMO.

Back when the world had Gold as a standard (both the full gold standard, and the later and lesser gold exchange standard, and even to a lesser extent the Bretton Woods agreement) there was an understanding that capital flows (gold) would be transferred from one country to another if international debts were accumulated.
Since gold was money or at least stood for money in a set ratio, there was a limit to profligate spending. You would run out of gold and money eventually. When you run short of money as a nation, deflation sets in, and that would drive higher the prices of all imported goods, thereby making our home grown industry more competetive, as it was before paper money in this country. [Hope that I have this somewhat right-but someone else chime in if I'm off base here.] But debt and deficits on any scale like we see them today could not exist.

Since the abdication of Bretton Woods agreement (1971) where we refused to redeem foreign accumulated dollars in Gold, because we knew even then that we were creating too many paper dollars, the world has been on the "dollar reserve standard" completely - and we are free to create as many $ as other nations care to accumulate, even if there is no intrinsic value to any of them. The dollar standard has of course led to tremendous inflation in foreign countries, as they hold the dollars (as being good as gold) in their own central banks and then create their own currencies and fractional resersve banking craziness just as we do here.

This foreign inflation has led to the production over-capacity world wide that we see today and the now begger thy neighbor attitude of international trade with deflation being spread in finished goods around the world.

When will it end? Good question--and one that everyone here wrestles with. A number of things could contribute to it's demise... foreigners finely get sick of accumulating dollars of questionable long term value...a gigantic financial accident collapses the markets here and world wide...the unfunded longterm liabilities of the U.S. finally become the here and now, and even we cann't borrow enough...etc.etc.

I'm sure others may have their own comments on your question or what I've stated here, and will fill in some of the missing blanks. Hope this helps some. ---Gdome

Guided's question:....

"Do you think the American government could have crafted policy over the last twenty years that prevented or slowed this devastating trade deficit and resulting job loss?"

Misetich

Definetely. The trading imbalances with, Japan and most of South East Asia has had its benefits as it supported the US $.

Imbalances with China is another matter, as exports to China has not materialized anywhere close where they could/should be. Had the US been able to penetrate the huge Chinese market the current situation would be ameliorated multifold.

NAFTA also contributed to job losses - though in the long run, once Canada and Mexico are "integrated" (annexed) it no longer has a bearing.

Deflationary pressures from China, South East Asia, India (technology) are counterproductive for the US economy and unfortunately unless measures are taken at least to match exports with imports with those countries matters will get worse.

Keep an eye on the Red Dragon

All On Board The Gold Bull Express

Further for Guided-- Under a Gold Standard--When I say that deflation causes an increase in prices of imported goods (maybe-maybe not in local currency), but I believe in the old gold standard days it would increase the cost of production to the exporting country. For if a country with gold outflows suffered a 50% deflation for example. An imported item that used to cost $20 before, now costs, say $10. So when the exporting country goes to convert the currency they now get only $10 worth of gold rather than the previous $20. And so, they had decisions to make as to how much of the deflation they cared to eat in terms of paying their workers in their own currency eventually. This was one of the balancing factors that gold served in helping to balance the playing fields, I believe. ----Gdome

I found this old clipping from The Wall Street Journal:

Wednesday, June 23, 1993

CREDIT CRUNCH
Some Homebuilders Find Loans Easier to Get As Market Recovers.

By Jim Carlton
Staff Reporter of The Wall Street Journal

"The home building industry, which has been in a chokehold the past three years because of the credit crunch, is finally beginning to breathe easier.

"A growing number of banks have begun aggressively trying to lend to builders, although terms are still tough and only top quality builders are being sought.

"Lending has increased to the point that builders polled recently by the National Association of Home Builders failed to identify construction financing as one of their top 10 "critical" issues, after having done so for each of the past two years."
*****

How times have changed!

I also found a well-reasoned article from Barron's On Line, dated January 20, 2003, by Jonathan R. Laing, titled:

The Debt Bomb: Only housing is keeping the fuse on America's borrowing habit from burning down.

Laing ends his article by quoting Jan Hatzius, a Goldman Sachs economist:

"By his reckoning, home values are at record levels, compared with either rents or median household incomes. Hatzius worries that housing is now highly vulnerable, owing to the likelihood of HIGHER INTERST RATES (GAB's emphasis) rising unemployment and lower home prices. And if the housing bubble bursts, instead of gently deflating, the nation's economy could be in for a major meltdown. In essence, then, the American home is a bulwark for the economy. As long as housing values stay high, the nation is sheltered from a detonation of the debt bomb."

So, fellow posters, what we should be on a sharp lookout for, is early warning from the housing market. Posters who have info on this - it will be of great interest to all.

Guano from the GAB.

Greetings Guilded,
You said; "I'm convinced this unravelling and fading of America as MK put it, is not an accident, but a planned sharing of the wealth crafted by deal makers. Deal makers we elected from both parties with little regard for generations of American investment (Blood Sweat and Tears!!) in this great country!"
----I would say no.
The last 30 years of financial and military behaviour can not be nutshelled into "with little regard".

This is from "Kemble Cotton Services". I don't know what Dan's sourse is...

"FOOD INSPECTORS CLOSE DOWN USDA CAFETERIA: District of Columbia food inspectors closed the main cafeteria in the South Building of the U.S. Department of Agriculture this week because of Health Code violations. The USDA was cited for water leaking excessively from the ceiling, employees not wearing hair covers, dirty ice machines, and mouse droppings by the salad bar, serving line, and the soda machines. The USDA, which has jurisdiction over meat and poultry inspection and animal and plant health, is embarrassed and immediately began to clean up the problem"

Now of all government agencies to fail basic cleanliness standards. Do you suppose those dealing with economic statistics have a good grasp of basic math?
Rich

Greetings Great Albino Bat.
I am thinking explosion, or sudden bust is not the way we will go. As you know, most of the CB's are in on the game and the big players also. They may envy the US with its deficeit benefits, but thier fear of the breakdown of the system keeps them on board. The regular joe doesnt want to know the whole thing is based on paper, so I dont think the public will freak and panic and blow up the system by reacting in a big way.
What does seem likely is the gradual evaporation of jobs with all the corrosive deflationary effects. Even in the 30's depression, some level of employment was maintained.

However, since the family farm has vanished, the fallback position for the regular joe is hard to imagine.
What DOES a suburban guy living in the middle of neighborhoods DO? Sure, the govt has (soon enough), made his mortgage 1000 years long, put him on the dole, and the
national medical coverage, but still he has to GET TO the food, how does he pay for the car? How does the school adjust teachers salaries down? How does he afford stuff?

Rush limbaugh is squaking about, you know, lift your downsized butt up by the bootstraps, but it is a different world from before. And soon to be even worse.
Say you want to make a career in the new depression, well, you can forget about opening a store, all products are (will be) produced elsewhere and the big chains have (and will have more of) a lock on retail.
They are eliminating check out clerks, soon you wont be able to take the kart out to your car so they dont have to pay a guy to do that.
I cant stress enough that the change from family farm to the new world of houseing has eliminated the depression fall back position.
Central Bankers must know that overpopulation has made
going in reverse an unimaginable and unhandleable nightmare.
They will have to agree on some global welfare state, but how to get there?

http://groups.yahoo.com/group/gata/message/1600World Gold Council's exchange-traded bullion fund
is stalled by tax and accounting issues.


To subscribe to GATA's dispatches, send an e-mail to:

gata-subscribe@yahoogroups.com

I think if necessary people will become more resourceful than they are now. People don't plant gardens or reuse things now because it's easier not to. If push were to come to shove most decent people will find a way to get by.

Here's what troubles me, though: I've seen references from time to time of Executive Orders which take away almost every freedom you can imagine. One E.O. outlaws dogs and cats as pets. Another outlaws every kind of plant on private property except for "native species" (meaning Bermuda grass, vegetable gardens, etc. have to go). Something else I read -- I can't remember if it's actually in an E.O. or not -- outlaws planting any kind of herb that can be used medicinally. Someone is trying to block off all the exits toward freedom before the fire starts, and you have to wonder why.

Hi Leigh, Kind of spooky to know that there is no way to
gracefully manage a slide into depression.
I agree, decent people will find ways to, well, eat I suppose!
Look at today, with ALL the wonders that spending all the worlds savings into our economy gives us, we are generally speaking, an unsatisfied spoiled population.
Unready for any decline in spending power, folks are depressed in the midst of plenty !
Wait till an economic depression gradually sets in !
What will the prozac companies do to help us cope with that?
Not to mention, will the national health care cover the drugs?

Millions of Americans find a life of plenty too harsh so
alcohol and drugs and mind medications are produced in the
trillions.

The folks of the thirties were a different breed.
We are definately not ready for our future.
New children DO adjust to present realities, but the adults around them? The rap community, well THERE is a group ready
to "get resourceful" !

Folks are going to realize, so much money went through my fingers, why did I think there would never be years of lean?
Even though we will have continued up times, the corrosion of job loss will continue and increase.
And increase and increase.
Wall street? Intact. Bond market, intact. Gold suppression?
probably intact. Dollar? Intact.
But, ever increasing numbers of regular Joes will find themselves with no livelihood.
A family farm will shine like a beacon, for those that need a road.
But again, mostly it is all woods again, and agribusiness will always seek to depress the farmer's prices, and fisherman? Well in case you didnt know, THOSE boys have, on the east coast, been driven out of thier boats by laws and ocean trawlers.
What will the regular Joe DO ?
How does a guy "get resourceful" in the new world of mega
corp dominance?
What can I sell to my neighbor?
What is the fall back position in this next depression?
I dont see it yet.

@Mikal, R Powell: Our community currently has its own currency, "Ithaca Hours" (www.IthacaHours.com). One of the reasons for its existence is to serve as a means for commerce based on something real (labor), as opposed to the dollar. Not sure I understand fully its value right now, but I can see that it will be very useful if serious deflation and depression occurs, when everyone is afraid to use regular currency because it will lose value.

@Buongiorno: Those who have been fleecing the country from the top over the past decades are only to happy to keep us pointing fingers at each other down at our level. There is a better way than wishing for what would amount to a restoration of abusive job conditions back in the US just so we can compete with the poor sods in developing countries.

Greetings Sir Remarx.
You are right, Bound Spirits post didnt contain leftist ideology. My youngest sister went to George Washington Univ in DC, during the Reagan years, taking political science no less, and after graduation she is telling me how cuba isnt so bad !!
When I say leftist, I suppose I am saying those that dont understand economics. Or rather, misunderstand it.
Since they misunderstand economics, they are able to be confused by poorly thought out attempts to mold a "better" economic model.

Maybe you mean you are Liberal? Or generous? Or sensible?
That is different.
If you are on this forum, and I welcome you by the way ;)
Then you are not a leftist. Gold is down to earth, not left or right. And that is a good thing.

Bound Spirit, I think the other multiple postings were just our attempts to post on the forum. After you posted, the rest of us got a database full response when we tried to post. They probably stacked up, then went in.
By the way, everyone here bloopers in different ways on different days. A couple days ago I completely misread Sir Gandalf The Whites post and until I reread it later, and responded, my first response probably made him wonder.
So relax into the forum, we give each other slack.

Seems to me that deficits may be an inevitible stage in a natural lifespan of empire economies. The roots of a perhaps an originally unintentional empire for the US are found in its changing role due to its involvement in the world wars. The immense investment overseas in resources after WWI, the blossoming of both a leadership role and those early investments after WWII, and the current "winter" time of reduced yield all seem to mirror the growth and aging of previous empires.

If that is true, I wonder if anything really could have been done via policy, other than softening the fall?

Thanks, Dollar Bill. Gold is security for the little guy/gal -- whatever his/her persuasion! (You can probably tell from the politically correct gendering that I am indeed a liberal!) <;)

http://micro.magnet.fsu.edu/primer/java/scienceopticsu/powersof10/Sir Remarx,
Look at this link !
You may have to relabel yourself !

Sir USD: That went over my head. Was that perspective of the Powers of 10 a reference to my long-term look at the deficit question from Guided, or a hint that more humility is needed?

A good night to all....... and a good week for gold!

http://biz.yahoo.com/rb/030809/economy_fed_credibility_1.htmlSnip:
"The blame game in the wake of the bloodiest U.S. bond market rout in nearly a decade is in full swing and many of the fingers are pointed at the Federal Reserve. Accusations are flying that the central bank overplayed its concerns on deflation in a manipulative effort to push long-term interest rates lower to goose the economy.

"The Fed whipped up a positive frenzy about deflation," said James Grant of Grant's Interest Rate Observer. "To my mind not the least of the sins of the Fed in this period was its cavalier willingness to suppress, manipulate and distort what had been more-or-less free prices."

But other analysts say misplaced market bets in the rally that preceded the meltdown may have been more the result of an unusually open Fed debate and a complex policy message than an intention to deceive. Former Fed governor Lyle Gramley agrees the Fed has had trouble communicating but disagrees with those who say the central bank's credibility with the markets is shot. He said the biggest problem was that the Fed's current message has mixed implications for bonds. It plans to keep short rate low for a prolonged period -- a bond positive -- but it wants to push up a too-low inflation rate -- a negative. "The Fed is in uncharted territory here, so is the market, and trying to communicate the message and getting it correct is inherently very difficult in these circumstances," he said.

Leftist? Rightist? How about Keynesians and Monetarists? Where are the Austrians? Maybe I expected too much out of Macro 101.

In a nutshell, here's how I see it. Libertarians don't get the whole social continuity � shredding the fabric of our cultural foundation, thing. Conservatives are obviously clueless regarding the fatal flaws of Keynesian economic theory, and liberals, I'm sorry to say, just don't get either. They're just hell on advocating the immediate adoption of utopian paradigms. For the record however, our universities are seething caldrons of liberal propaganda � just go back to one at age 46 and try to structure a counter argument � I dare ya!

I guess its ok to push the envelope with new ideas � it would even be refreshing to be ganged up on by 20 anarchist/ environmental/ vegetarians. But no, overriding all of that is that most of us today (particularly the under thirty crowd) are conditioned to never expressing an opinion. You see, having opinions today is a sign of ethnocentric/ bigoted/ close minded subjectivism or something like that. We can talk about the political spectrum ad nauseam � but how meaningful can it be if few are even close to being up to speed on the basic argumentative framework. I just don't see in these kids any of the "what's it all about - wondering why �there's got to be a better way" ambitious confidence. The sense I get is alienation, hopelessness, some really shallow sound bites and PC paranoia. Some of the students have the society-owes-me demeanor and for sure, most, are just plain clueless. I'll admit though, all is not completely lost, I have met a few students that are far brighter and together than I'll ever be � but they're rare. These kids need mentors, you know, like Socrates � but we've been failing there � admit it.

So in my opinion, the problem is way beyond political ideology � we're talking a true mobocracy here, with citizens who are about to be introduced to nihilism and hunger. God I hope I'm wrong. But why do you think I own gold.

Anyway for your reading pleasure here's another little text book excerpt. I think you'll enjoy this one as much as the last � I did!

**********

The Rules vs. Discretion Debate

Because monetarists believe that the money supply is the primary determinant of nominal GDP in the short run and of the price level in the long run, they think that control of the money supply should not be left to the discretion of central bankers. Monetarists believe in a set of "rules" that the Federal Reserve must follow. In particular, Monetarists prefer the Money growth rule: The Fed should be required to target the growth rate of money such that it equals the growth rate of real GDP, leaving the price level unchanged. If the economy is expected to grow at 2 percent in a given year, the Fed should allow the money supply to increase by 2 percent. Monetarists wish to take much of the discretionary power out of the hands of the Fed so they cannot destabilize the economy.
Keynesians balk at this proposed money growth rule. Keynesians believe that velocity is inherently unstable and they do not believe that markets adjust quickly to return to potential output. Therefore, Keynesians attach little or no significance to the Quantity Theory of Money. Because the economy is subject to deep swings and periodic instability, it is dangerous to take discretionary power away from the Fed. The Fed should have some leeway or "discretion" in conducting policy. So far, Keynesians have won this debate. There has not been serious talk in some time of tying the Fed to a fixed money growth rule.
Fiscal Policy
Because Monetarist dislike big government and tend to trust free markets, they do not like government intervention and believe that fiscal policy is not helpful. Where it could be beneficial, monetary policy could do the job better. Excessive government intervention only interferes in the workings of free markets and can lead to bloated bureaucracies, unnecessary social programs, and large deficits. Automatic stabilizers are sufficient to stabilize the economy.
Empirical Evidence of Monetarism
Which school of thought is right, Keynesians or Monetarists? The answer hinges on the two assumptions described above: the stability of monetary velocity and the efficiency of markets. We address the first of these two assumptions here. The figure titled "Velocity" plots velocity of M1 from 1970 to 2000. In the 1970s velocity was not stable, but at least it was increasing at a fairly constant rate.
Monetarism relies on the predictability of velocity rather than absolute stability, so in the 1970s one could make a case for the short-run quantity theory. However, the 1980s and 1990s have not been kind to Monetarist assumptions. Velocity was highly unstable with unpredictable periods of increases and declines. In such an environment, the link between the money supply and nominal GDP broke down and the usefulness of the quantity theory of money came into question. Many economists who were convinced by Friedman and Monetarism in the 1970s abandoned this approach in the mid- to late-1980s. The empirical relationship had simply broken down. Why? Most economists think the breakdown was primarily the result of changes in banking rules and other financial innovations. In the 1980s banks were allowed to offer interest-earning checking accounts and many people chose to hold their wealth in the form of M1. In short, the distinction between checking and savings accounts partially eroded. Moreover, many people found that money markets, mutual funds and other assets were better alternatives to traditional bank deposits. Hence, the relationship between money and economic performance changed. The figure titled "Growth of M1 and Nominal GDP" illustrates the lack of correlation between money growth and nominal GDP growth since the mid-1980s. Monetarists and Keynesians alike closely watch the behavior of velocity. If velocity should become more stable in the future, there is no reason that monetarism could not make a resurgence. The Federal Reserve would be thrilled to have an indicator that predicts economic activity so accurately.

Keynesians vs. Monetarists
Keynesians and Monetarists fought head-to-head in the 1970s. Most economists conclude that Keynesians won the war, but Monetarists won many battles. Because of the healthy debate, Keynesians are more convinced of the importance of the money supply and monetary policy, especially over the long run. They are more acutely aware of the long-term threat to price stability that rapid money growth can bring. Keynesians are also now more likely to prefer monetary policy to fiscal policy.





Despite the convergence, substantial differences remain between the two bodies of thought.
� Keynesians argue that the Fed should use discretion in conducting monetary policy, while Monetarists advocate a long-run money growth rule.
� Keynesians still view fiscal policy as potentially important. Monetarists are less convinced of the usefulness of fiscal policy.
� As a general rule, Keynesians believe that the Aggregate Supply curve is more horizontal than vertical in the short run so stabilization policy can have big impacts on output and employment. Because Monetarists believe that the economy is inherently stable, they tend to view the Aggregate Supply curve as more vertical so discretionary stabilization policy is not as important.

Although differences remain, the debate between Keynesians and Monetarists cooled considerably in the 1990s. Monetarists could no longer defend a simple relationship between M1 and nominal GDP. Many Monetarists now emphasize the longer-run relationship between M2 growth and nominal GDP growth. Although Keynesians do not stress the importance of money growth as much as Monetarists, the focus on the long run is much less controversial.

********************************
good night BS

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=25290The 10 year yield slipped back to 4.28% this week. Is the bond bubble story overblown or is this simply the calm before the storm?

TIA

Thanks, Bound Spirit, enjoyed the read. It's clear the discussion you quote is bound also. Bound by the accepted versions of the truth, with no room for anything else, and it is the 'anything else' that really applies. Students are no longer taught to quest and excel, but, rather, to fit in. Little do they know that between the piano keys there are other notes, and that it is these notes also that rule the universe. May the priests and chaplains help those who find this out. Because the others, who do not know these things, will treat them like pariah.

How this relates to gold is this. In a society where ignorance is king, those who are kept from knowledge are servants, not free. For only the free can think for themselves. And only the free own gold while the popular impression happens to be that it is a barbarous relic. Therefore it is in the interest of all of us to expunge this ignorance, to spread the truth, and to increase the realm of true knowledge. We all want gold to function according to its real merits. This is how.

But it means we have to look beyond Keynes and the rest, we have to live outside the box, not merely closer to its edges. Stepping outside the box is hard for those who have been inside the box for very long. It requires coming face to face with realities they are not used to. And this shocks many of them to the point where they feel they must deny it, and prevent others from seeing it.

http://www.jobsletter.org.nz/jbl11310.htmOne example of thinking 'between the keys', as expressed by nation-of-one, is the book entitled "The Economic Horror", by Viviane Forrester (now in translation to English). It talks of a world where employment is irrelevant and no longer a meaningful variable.

IMHO, Alot of money in the pay packet or pocket gives one the illusion of prosperity no matter what the price levels are.From what I have observed someone would rather say their making 20 dollars an hour than 5 dollars an hour,even if at the 20 dollar level it is more expensive to live than the 5 dollar level.Our society is based on illusion and slight of hand.Just a thought. Just got in took a 12 mile hike with 40 pound pack yesterday along the maumee river we followed an old canal boat path from the early 1800s it was nice but I am paying for it today.My hats off to the roman legions who marched around the world.21

http://www.euromoney.com/default.asp?page=888&/public/markets/bonds/header.html&/public/markets/bonds/bridport.htmlSnip:

Remember the three possibilities: stagflation, recovery with inflation, deflation. For the USA, the view we have taken since the Fed pulled its greenscam on investors (by first implying and then denying it would buy long-dated T-bonds) is that stagflation is the most likely. Recovery is unrealistic in an economy over-indebted in every way possible, dependent on cheap money for its remaining strength, and with surplus production capacity. Deflation, on the other hand, looks unlikely when everything is in place for continued weakening of the dollar, which would seem incompatible with deflation, since it pushes costs and prices up. Higher input costs are now combining with more expensive money as the US Federal Government borrows massively, and with households losing the option of refinancing their mortgages to maintain their spending. That means slow expansion of the economy at best, combined with rising prices, i.e. stagflation.
.................
Misetich
Sir Greenspan has turned off the bond market - The Feds are attempting to steer the market in a chosen direction yet each passing day the flock is abandoning their TRAIL and discovering the GOLD TRAIL

All On Board The Gold Bull Express

No, I do not think the bond bubble story has been overblown.

Fear comes into a society in little waves, that become greater waves that finally can engulf the whole society.

We have just passed the turning of the tide, this past June, when bond prices reached their highs, and interest rates their lows. The little waves of fear of falling bond prices advance and recede, but mostly advance. At last, the panic race from the beach before the oncoming tide rolls over you.

Another simile might be that little voice in the crowd that piped up: "But the Emperor is naked!" Once those words were uttered, to the horror of all, there was no way to take them back. The Emperor was indeed, stark nekkid. It took a few moments for the news to travel through the crowd.

That's where we are now; the news is travelling fast, and the courtiers of the Emperor are doing their best to convince the crowd that "Of course, it's not true! The Emperor is fully clothed in the finest garments in the world!" There is some wavering, some people are disconcerted, some think this is "overblown", the fact that bonds are going down in price for a considerable period is hard for them to digest. So they pile back in and halt the decline for moments. But, the fact remains: "The Emperor is naked!" A fact is a fact is a fact, and it will remain with us for a LONG time.

We have passed that famous "toppling point", where everything topples. The dominoes are falling. (More metaphors!)

An interesting week ahead.

My neighbor has finally turned pro-gold. He is an old-timer, ex-Marine, experienced in the oil and gas field. A staunch patriot and very conservative in his views. It must have been a struggle to overcome the influence of ALL means of communication in the US, and actually buy that shiny but so silly, so unproductive, so unsophisticated, so un-American, so reactionary and do-nothin' metal called GOLD.

This is only "anecdotal evidence" but, I think it does illustrate what is happening up and down the US. A new awareness of a hitherto disregarded danger, and awareness of the advantages of gold.

MK, you have your finger on the pulse, and you can tell us better than anyone else if larger numbers of Americans are waking up now.

Enjoy your Sunday, all!

The GAB

Very much in agreement!

Take a moment to consider that all these modern economic philosophies are sets of ideas on how to manage economies... and that they all boil down to numbers and percentages of this and that and the other statistic, and how they are supposed to interact - every economist has his ideas on the importance of certain numbers and how to affect the numbers for a preferable numerical outcome - in "GDP", a number.

The fundamental idea behind the philosophy prevailing today is that human beings are just so many machines, whose operation is managed by numerical digital readouts. In the best cases, human being are but cattle to be kept happy and well fed. Numbers garbage, every day.

But why should humans be kept happy and well fed? This is merely at the pleasure of the cattle-owner and manager. We hear ghastly reports of people in power who are talking of reducing humanity to a maximum of - 500 million! Later, when that has been achieved, maybe 50 million will appear preferable. And so on.

No, human beings are NOT machines. They are not cattle!

They are beings endowed with souls and with free will, and their actions are not machine-like in predictability. Rational human action is entirely unpredictable; that is why we have a permanent program of degradation through all sorts of vices, and a permanent program of artificial crises and fears, (AIDS, SARS, IRAQ, N.KOREA, etc., etc.) so that human reason cannot prevail in the face of fear, nor rise above passions, especially sexual passions, which carry all before them.

Do you think it bad taste to talk of the HUMAN SOUL? If so, you are in danger of being carried off by this tide of evil.

Gold is the last material bastion. If the satanic powers that be succeed - God forbid! - in degrading mankind to such an extent that gold is no longer esteemed and valued - a very , very big IF, thank God! - then humanity will have vanished and this wide world will be populated with monsters: some of who are exploited like the cattle they have become, and others who exploit with inhuman cruelty.

Sunday guano from the GAB.

http://stockcharts.com/def/servlet/SC.pnf?c=$GOLD,PLONG before Tricky Dicky slamed shut the US Gold Exchange window, there was a TV program that was veiwed, by most able, each week. It was quite interesting and gave away a HUGE Fortune (at that time), in that the top prize was $64,000.

YES, it was called the "Sixty-Four Thousand Question" !!

Well, I have a question that is of equal importance to all Goldhearts. As one can see from the chart (link) the TREND is very near a "change", into an "UP TREND", if the POG reaches $360.

(For you non-TA types and learners <;-), three X's will be added to the blank right-hand column, at the $360. level.)

This appears to be quite possible, in that the POG is, presently, very near that level.

THE REAL Question is a $364.+ question. However, in order to achieve a "DOUBLE TOP BREAKOUT", the POG must reach in excess of $368.+ and then the technical outlook will be -- for a POG "TRIP TO THE MOON, Alice !"

SOOO, will we see the $368.+ level this week ?
<;-)

That is the craziest Tic-Tac-Toe game I have ever seen.
Slingshot--------------<>

August 2000 the American economy lost manufacturing jobs. It lost more in September and October. For the next 33 months, right up until today, the same thing happened. Raise your hand if you detect a pattern here.

If you want to know why the job market is so weak, manufacturing is a good place to start looking.

While service employment has roughly held its own over the past 18 months, manufacturing jobs have disappeared at a rate of about 75,000 per month.

And then there is the bad news. Some forecasters think the decline will continue, even if the overall economy gets better.

Ford, one of the weakest players in the industry, has hinted it would like to eliminate 20,000 white-collar and 20,000 blue-collar jobs to brings its costs into line with more efficient Japanese carmakers.

Terrific you neighbor has joined the crowd. Not a very big one ,YET!
That is two in a week that started buying gold.

Something happening here.
What it is ain't exactly clear.
Slingshot---------------<>

The below post is a snippet from elsewhere.

This meeting was held last week in Denver and included presentations by seventy-three companies. WOW! That was a lot of detail to sort through. However, a few general items started floating to the surface:
1. With high O&G prices, about 25% of drill rigs are not being utilized. Why? Perhaps the industry: a) remembers recent collapse of prices and does not want a repeat. b) Industry thinks the economic recovery will not continue, and may, in fact, lead to a serious decline. c) Oil people have conspired (ho ho)to drill less and thus keep prices high. d) The industry thinks more Middle East and other sources will come onstream soon to lower prices.
2. Even with very high prices, gas injection is still running about 10% behind past five years. See above.
3. Most of the major companies represented, and many of the smaller ones, have cut their exploration budgets.

Sir Black Blade, wish you could have been there. In general these companies seem to be verifying what you have been reporting to us for some time now. What think you about the 25% idle rigs with prices where they are? Can we possibly just have less viable prospects to indeed drill? One wonders....where this will lead us, and what impact will occur upon our favorite metal prices?

Your faithful cub reporter!

BUONGIORNO!

Nice story. Fundamentally I agree with you 100%. In the last couple years I have felt 100% in my gut and my heart that things don't 'feel' right. There's something wrong and it ain't little!

I've been skatin' around in the gold world since early '98, mostly losing money. Making a little now thanks to the basic advice of Jim Sinclair. "Sell 1/3rd into strength, it you don't understand the game don't get fancy."

So I have, and I've been gaining and as of late gaining quickly. So now Mr. Sinclair after preaching for a long, long time to sell into strength is advocating holding, putting the squeeze on 'em.

In essense, he is saying much the same as you; the system is broken and as this juncture in time THEY CAN'T FIX IT!!
I think I agree, it's just so hard to hold after this big gain. That's why I asked about the bond market falter we saw this week. I may hold this week, it looks like it's getting serious. The HUI has roared ahead of the metal, it must be seeing much, much higher prices.

We shall see.

Have a golden week.

This weekend I've seen some excellent posts on the forum about what is happening and what might happen "the morning after" when the buck stops and dies here in the USA. This is a valid issue for the forum and most of us have developed a "survival" plan that includes the accumulation of enduring wealth. Here's my two cents.

Here's where I'm coming from:
Deuteronomy 25:15 You must have accurate and honest weights and measures, so that you may live long in the land the LORD your God is giving you.
And:
Proverbs 20:10 Differing weights and differing measures-
the LORD detests them both.

I'm an engineer not a historian and I nearly flunked philosophy 101, one of my few non-tech electives. But nonetheless I am aware that cultures, civilizations and nations emerge, rise and then fall with regularity. The common denominator for systemic failure seems to be corruption. Corruption comes in a variety of manifestations in government, business and our personal lives. I (from my Judeo-Christian viewpoint) can usually find a moral transgression associated with each case of corruption. So I make the obvious link between the lack of morality and failure and in my mind corruption is inversely proportional to morality. Hence, the potential for failure can be predicted by the balance between morality and corruption, ie., good vs evil.

We've all heard the admonition that power tends to corrupt. The quest for power and the desire to hold it often trumps morality. The Founding Fathers of the US understood this and severely restricted the powers of our federal government. The last 200 years has seen a trend to greater governmental power and involvement in our daily lives. This has invariably led to a greater potential for corruption. For example, the "Great Depression" saw the creation of a number of well-intentioned governmental programs meant to ease the pain and restore the economy. However, once the economy was restored, some of the programs did not go away but became entrenched and enlarged. Sort of like a patient cured of a disease but continuing his medication. This medication, once beneficial, might ultimately deprive a patient of his natural ability to resist disease. I think we are seeing the harm that can come to a population that has come to depend on the government for medicines that we really don't need. ( Is my conservatism showing yet? ;-)

Now that we in the US may be on the brink of another and possibly "Greater Depression", what will be the outcome this time? If recent history is indicative we will see our government try to save many of the most corrupt institutions from failure such as the banks, investment firms and GSE's to the longer-term detriment of the general population. In other words the biggest and most corrupt will be medicated and saved. This will happen unless we find leadership such as we had 200 years ago; leadership that will recognize the systemic disease of corruption and reverse the course of our entrenched power structure. What's the chance of that? As an optimist I am inclined to think that such leadership will be forthcoming if we only have the good sense to recognize it. Otherwise the prognosis is grim. Whichever way the future flips, be prepared. You know the drill.

Here's a biblical rendition of what may lie in the future: Hosea Chapter 9. Substitute US for Israel and the $ for Baal.

7 The days of punishment are coming,
the days of reckoning are at hand.
Let Israel know this.
Because your sins are so many
and your hostility so great,
the prophet is considered a fool,
the inspired man a maniac.
8 The prophet, along with my God,
is the watchman over Ephraim, yet snares await him on all his paths,
and hostility in the house of his God.
9 They have sunk deep into corruption,
as in the days of Gibeah.
God will remember their wickedness
and punish them for their sins.

10 "When I found Israel,
it was like finding grapes in the desert;
when I saw your fathers,
it was like seeing the early fruit on the fig tree.
But when they came to Baal Peor,
they consecrated themselves to that shameful idol
and became as vile as the thing they loved.

OK. Where's Moses when you need him?

This post is too long and it makes my brain hurt. One more thing. Last week I read a book. Nothing earth-shaking but one that has much relevance to what we discuss here. The title is The Richest Man in Babylon written in 1924 by George Clason. It's a very simple and clear message about the virtues of saving and wealth building vs. the ultimate slavery of consumption and debt.

Thank God it's almost Monday.

Boilermaker

Heavens, madam ! You can't be serious. There are people who make careers out of answering queries like that ! Bear in mind that, while the British Isles are tiny by comparison to the good ole US of A, the population is one sixth, and the length of human 'civilization' (ie we can still see evidence of their presence) is about six times that of the US. So what should I not miss in a couple of weeks vacation in the USA ?

OK, OK, bearing in mind that the problem is more one of elimination, I have two suggestions.

First, when I was there about a month ago, Channel 5 ran a series of four two-hour shows on their viewers' choice of the top ten stately homes, ancient monuments, castles and gardens. Top stately home was Chatsworth, in Derbyshire, (which is conveniently close to Hatton Hall, another interesting place - amazing to think they were built only a hundred years or so apart). Top ancient monument was Stonehenge (surprise). Get the commentary 'wands', and remember to look around for all the burial mounds there. And try to take in Avebury close by - a stone circle so big there are several houses of the village built inside it ! Top castle was Warwick (second W is silent on the east side of the Pond). Try to listen to the storyteller, and leave time to have tea and scones (with cream) in a 16th century tearoom close by. And I don't know about the top garden - we went out that night.

2nd suggestion: British Museum in London, second floor (well, first if you are European) there is a big room explaining all about the history of money. (Well, I had to put something in of relevance to the forum !)

Bon Voyage !

C!

PS. All my suggestions were for England, but there are lots more in Wales and Scotland. Ireland, too, but I have less personal experience.

Comments are regularly presented on this Forum, regarding future developments in the U.S.

It is my opinion, that the reserve currency status of the U.S. dollar is going to come to an end sooner or later. Some are of the opinion, that this cannot happen, because of the terrible consequences; that it would destroy world exports to the U.S., including those of mighty China, not to mention Japan, Southeast Asia and Europe. So terrible would the consequences be, that all these powers cannot afford the loss of Reserve Currency status for the dollar.

This argument appears invalid to me. It is something like saying, "Mr. X cannot possibly die; he is my mainstay and support, and his dying would be the end of my prosperity." Well, people do and must die, consequences or no consequences for the survivors. So it will be with the dollar. It will lose Reserve Currency status, whatever the consequences, because it has to happen. Present trends and present circumstances, all indicate that the dollar will cease to have Reserve Currency status in the not distant future.

Such a great fall from financial power has happened to great empires before, and will happen again. What comes directly after this happens, will be: Exchange Controls, high tariffs and import permits. (Mighty Walmart, watch out!) No dollars will be exchanged for other currencies, unless covered by a government permit, for the duration of the crisis. This happened to the great British Empire, whose Pound Sterling was unquestioned supreme currency in the nineteenth century. Only a few years ago, was it possible once again, for the Pound Sterling to be freely sold for foreign currencies, in Britain, since the beginning of WWII, if memory serves.

Once Exchange Controls are in place, other great political turmoil will begin.

Not to make this post excessively long, those in power will depend on the Military. Military loyalty to the government will be indispensable, and such loyalty must be paid for fully, generously and promptly. The military will have first call on resources, or else.

The U.S. in bankruptcy, depending on printed or electronic money, will inevitably fall into a great inflation. Prices will reach unbelievable levels. It will be harder and harder to keep all the military happy.

Eventually, the loyalty to the government will crack � somewhere. There will be attempts at military takeovers, without bloodshed if possible. This is the recipe for Civil War between factions led by military men. The military mind will think thus: "You, the government, need me more than I need you. So, move over, I do not need you; I'm running the show from now on." (The move to - figuratively speaking - cross the Potomac, rather than the Rubicon, as Caesar did, may not be made by a many-starred general, but by a Colonel; Napoleon was a Corporal)

Civil government will give way to military government, or a succession of military governments. No other governmental formula will be able to maintain order within the U.S.

All this will probably take place after this old bat is gone. But if this old bat can see this coming, most certainly those in power know it and are taking precautions. However, whatever the precautions, whatever the systems of security and information, the tendency to military takeover will be present, will not go away, and will eventually erupt into fact.

Please understand that this old bat is NOT advocating military government, only that he is of the opinion that this is the way things are going to play out.

The military love gold, incidentally. Note that Pres. Hugo Chavez has taken the Central Bank of Venezuela's gold under his personal custody. Wherever he sleeps, the gold is only a couple of doors away! Gold is the guts of War. So it has been, and so it will ever be.

Be sure to build your own personal stash, it will certainly come in handy, some day.

The GAB

I just went over to Amazon and read up on the book you mentioned, "The Richest Man in Babylon." What impressed me is that that little book, written almost 80 years ago (and which I'd never heard of), is ranked #537 on the Amazon sales list. SOMEONE is reading it. I hope they're absorbing the gold message that seems to be in it!

This is not an answer from a Technical Analyst, but from a Fundamental Analyst.

I believe the Exchange Stabilization Fund has its hands full with the bond market and that they will cover their 50,000 to 75,000 Comex Gold shorts in the next 2 weeks. That should put the market up to about $400. From there, the Cabal Gold shorts should take over and put the market to the high $400's.

Ray Patten (08/10/03; 21:13:54MT - usagold.com msg#: 106995)
===
LOVE the way you think, Sir RP !!!
THAT may be the answer.
<;-)

Leigh and Boilermaker - please forgive my intrusion. But I checked that book out of the library when I was thirty-five years old. It took me an afternoon to read it. At the time, I had no savings whatsoever, and I was tired of worrying about money. I thought I was going to have to work like hell and be damn lucky to ever get "rich".

Today I am fifty-five. Largely because of that afternoon I spent reading twenty years ago, I am now retired and living very nicely. Thanks to that little book, my time is my own, and I do with it as I please.

The truth is that the wealthy don't always get that way via the big paycheck. Through the miracle of compound interest, practically anyone who starts early enough can wind up with far more money than he will ever need.

What I don't understand is why there aren't many more millionnaires in the world than there are. Why, in fact, don't we teach this stuff to every kid in high school? It is a shame we don't.

Perhaps you or someone else reading this post will read "The Richest Man in Babylon" and have his life changed by it the way mine was. I hope so. I'm sure lots of people have.

Oh, and by the way, just in case anybody is wondering, don't be misled by the title. It has nothing to do with religion. It is just a little book about how money grows. Thanks.

How does one find it ?For me the most important indicator when looking at the chart for an individual company is the volume.
When looking at the various Comex charts I have yet to see a volume indicator.
I'm sure there is a good reason for this.I suppose it has something to do with contracts ?
I find it difficult to make sense of the ups and downs of the spot and would love someone to direct me to a site where one can get a sense of the volumes.
Thanks to all.

volumes on the spotThe comex charts give me the volume.
It's the Spot volume I'm wanting.

spotlight (8/9/03; 04:17:21MT - usagold.com msg#: 106943)

I would have enough cash for meeting expenses for several months (maybe 6 months to a year) whereas I would think that a good stash of gold and silver would fit the need for long term savings. Who knows where it leads as far as a new monetary system is concerned. I just try to take an insurance position for come what may.

Boilermaker

What concerns domestic energy producers is that they have been promised access to prime target areas for exploration and production for the last two years by the current administration and have been lied to over and over. Why should they utilize drilling rigs and produce higher cost energy when cheap energy is abundant but inaccessible due to political reason alone. In order to make a profit on high cost energy the price for current energy produced must remain high. Can't blame the energy companies, they aren't charities after all. The point is if people want to "feel good" about rabid environmentalism even in what are essentially waste lands then there is a price to be paid by all and that price is felt in the wallet, economic recession and lost jobs. So as long as the voting majority is willing to foot the bill then the energy companies are content to keep prices highs as long as they make a profit.


- Black Blade

I think you may have misdirected the subject message to me.
Perhaps it should be for Buongiorno! msg. 106989?
Whatever. Have a good week.
Boilermaker

http://www.amazon.com/exec/obidos/tg/detail/-/0451165209/103-0450129-5769424?vi=glanceLeigh and others here, check out the reviews for this book at Amazon.com.
In my case I came to read this book because my 20 year-old son gave it to me and told me to read it. He's got the same penny pinching ways as his old man.
I would add another comment to the reviews. The book addresses individual wealth building but the same approach applies to nations. We in the US live in a profligate society about to self destruct. Hopefully our next president has/will read this book.

Good week all
Boilermaker

Sorry about that. Got in late last night after a weekend of fishing in Yellowstone. I was a bit tired and not concentrating all that well. At least a got some fish to throw in the freezer. ;-)

- Black Blade

http://focus.comdirect.co.uk/en/detail/_pages/charts/main.html?sSymbol=GLD.FX1&sRange=3Way to go Spike!!!

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B1891BD12%2DBE54%2D464C%2D9E57%2DD88746EBFBC6%7DSnip:
"The Philadelphia Gold and Silver Share Index (XAU: news, chart, profile) was up almost 8 percent on the week. It closed Friday at 86.44. That's right at a critical resistance level, according to technicians like Martin Pring. He wrote recently in his Weekly Update that "the [resistance] line is currently at 84, so a daily close above the 86-88 zone would do the trick."

Waverider: Good news as movement in the shares generally precede the physical.

http://www.ridgecrest.ca.us/~auborn/agua/goldentrout.htmlYou didn't happen to hook a "Golden Trout" on that weekend fishing expedition did you? ;-)

Just some Cut Throat, Brookies, and Rainbows. I haven't caught any "Golden Trout" for several years now. They are rather small and just as rare as finding gold too. ;-)

- Black Blade

http://sg.biz.yahoo.com/030810/16/3da6e.htmlSnip:
"The world's biggest gold mining company, Newmont Mining Corp (ASX:NEM), has said the appreciation of Asian currencies against the US dollar will boost demand for gold.
He said a revaluation of the Chinese currency, for example, would make it cheaper for the Chinese to buy gold. "So if you are Chinese, what would you do? You are going to buy a whole lot more," Mr Lassonde said. "So from the demand side, we see very, very positive development, and that is going to be true not only of China but also the whole of Asia because they're running an enormous trade surplus. "If you add up the four top central bank reserves in Asia, it amounts to two trillion dollars. "The minute they stop buying the US dollar their currency has to be revalued and that is good for gold."

http://www.usagold.com/AMK/MK-gold.htmlUpdated.

New Quick Notes.

Two new Stein.


"August 15th is usually a watershed in the gold market as the last vestiges of the summer doldrums are pushed aside, the end of year jewelry season buying begins to kick in, and investors begin to move from summer recreation mode back to the real world of business and investments...............For those of you keeping a scorecard, gold is up 13.1% over the past 12 months ($354/313) and the Dow Jones Industrial Average managed a 6.2% return (9154/8616)."

http://stockcharts.com/def/servlet/SC.pnf?c=$GOLD,PThe new "UP TREND" at $360. has been started !
Can the "BREAKOUT" at $368. be far away ?
WAY TA GO, SPIKE AND SPOT !

http://www.usagold.com/gold-coins.html

http://biz.yahoo.com/rf/030811/markets_fed_openmarket_1.htmlNEW YORK, Aug 11 (Reuters) - The Federal Reserve said on Monday it added $7.25 billion in temporary reserves to the banking system through two-day system repurchase agreements.

----(from url)-----

The Fed's trading desk hit the numbers square on as a nice show of marksmanship in today's open market intervention, one day before tomorrow's gathering of the Federal Open Market Committee meets to assess the nation's economy, describe their evaluation in a nutshell, and provide a policy objective to the Trading Desk as its operational directive until the next meeting occurs September 16th.

At the prior meeting (June 24/25) the FOMC voted nearly unanimously to lower the fed funds target in open market operations by 25 basis points (while the Board took concurrent action to similarly lower the bank's rate for primary credit at the Fed's discount window.)

San Francisco Fed President Parry was the lone dissenter at that time, preferring that the fed funds target be lowered by 50 basis points. In tomorrow's meeting analysts widely expect the Fed to stand as is on its current rates, so the market's anticipation of the meeting's conclusion is primarily for the content of the statement as in indicator of leanings for future policy.

R.

Near the high of the day: $361.60.

And the Euro up against the dollar too, over seven-tenths of a cent.

Is someone getting leery of US fiat currency?

http://biz.yahoo.com/rf/030811/markets_precious_comex_1.htmlNEW YORK, Aug 11 (Reuters) - COMEX gold shot higher after a quiet open Monday...

At 9:17 a.m. December gold was up $4 ... touching its highest level in 12 days.

...Gold has outperformed the euro in recent days, decoupling from its usual tight currency correlation. Weakness in the euro overnight failed to keep gold from stretching last week's gains.

Gold's acceleration Monday morning came as the euro fought back to $1.1333/37 from a drop below $1.13 overnight.

...Bonds and blue chips were under pressure before Tuesday's Fed meeting, fostering investor rotation into gold. Central bankers are expected to leave the fed funds target rate at a 45 year low of 1 percent, having eased 13 times since January 2001.

...September silver was off 0.2 cent at $4.99, having failed to hold above the $5.00 level Friday.

------(from url)------

Lots of action in the COMEX betting pits these days. It could be argued that having a long contract position is like standing on deck having a ticket for a seat to a lifeboat somewhere amid the chaos of the sinking Titanic, whereas having physical gold is like being already on shore. It's "a sure thing".

R.

http://www.expatica.com/germany.asp?pad=196,218,⁢em_id=33340
Snippit:

The search for gold stolen by the Nazis has resulted in a stream of films, books and treasure hunters. Now German television has produced a new documentary about the search for the hidden treasures of Hitler's Third Reich. Jack Kindred reports on what they discovered. A word to would-be Nazi gold and treasure hunters: forget about it � at least if you're scouring Toplitzsee lake. This is the message from German biologist, Professor Hans Fricke, the man who more by chance led the underwater research of the 107-metre deep lake in the Austrian Alps. Originally setting out to discover biological secrets of the unique lake, the professor instead got caught up in the mystery about vast sums of Nazi Germany's hidden gold.

As Fricke explained at an advanced press screening in Munich of the documentary, he came on the legend of the Nazi gold by chance. Backed by the scientific research think-tank the Max Planck Institute, Fricke, a biologist, obtained special permission from the Austrian Interior Ministry to research the Toplitzsee because of its unusual chemistry � its waters were rich in sulphur with no oxygen. He wanted to know what forms of life exist in such an environment. In a specially designed capsule called Geo, Frick made his first diving exploration in 1983 for the German geographical magazine of the same name, and made an astounding discovery. Some 60 metres down, Geo's arm claw pulled up a huge ball with hundreds of forged English pounds stuck to it.

However, with Fricke's discovery of the forged notes in 1983, the effect was to reinforce wild rumours about Nazi gold having been concealed in the lake. Notes were not all that the professor found. The lake bottom proved to be a veritable military junk yard, with bombs, mines, discharged rockets, measuring instruments, explosive devices, parts of V-rockets, and unopened chests covered with silt. The idea of forging English notes came from Adolf Hitler himself. In an exclusive interview in the documentary, Krueger explained how they carried out the most perfect money forgery in history, cracking the code of the Bank of England, and obtaining watermarks and the right paper. Most of the workers at the camp were Jewish who knew they would be killed eventually to keep the forgery operation secret. The end of the war saved them from certain death. Some of the forged notes were sent to agents and embassies and were later used to finance high-level Nazis fleeing to South America. In his travels Fricke was told by a top official at the Bank of England that had the forged notes been widely circulated during the war, it would have been a disaster for the British economy and war effort.


Black Blade: This is really an old but somewhat obscure story in the west. No gold found (at least yet), but an interesting chapter in Nazi history. It may have exposed a flaw with paper currency that mints around the world struggle with to this day. Interesting that such a brilliant idea was devised by a psychopath in the war effort. What a "treasure trove" of history at the very least.

http://www.usagold.com/DailyQuotes.htmlexcerpts:

...physical demand is underpinning the gold market as Asian and Middle East demand is reported to be quite strong given the traditional slow summer period. Physical demand should remain robust as fabricators and jewelers gear up for the yearly central Asian festival season and upcoming western holiday seasons.

In what appears to be a repeat performance for AngloGold, another rival has come to the forefront to compete for the assets of Ashanti Goldfields. Last year, AngloGold lost out to Newmont Mining, the world's biggest gold miner, in a bitter battle for control of Australia's Normandy Mining. A successful outcome would make Randgold a medium-sized gold mining company. Large gold miners are having a difficult time replacing reserves and have foregone massive exploration in favor of buying smaller rivals instead. This was not unexpected of course but only punctuates the problem of declining mine output in coming years.

----(see url for full report)----

http://www.thesandiegochannel.com/money/2393469/detail.htmlHEADLINE
Red Hot: Gold And Golden Arches

(excerpts)

Stable interest rates and improved McDonald's sales propped up a sleepy market Friday, helping it post modest gains at the end of a rocky week.

[The Nasdaq] index posted its sixth straight loss in dropping 8 points to 1644. The outlook for techs did not improve when the Philadelphia Semiconductor Index broke beneath its 50-day average in a broad 3% retreat.

The Dow fared considerably better, gaining 64 points ... Consumer and financial stocks led the way. So did gold miners, with top player Newmont Mining rising 4% to a new five-year high. The Amex Gold Bugs Index of gold producers most sensitive to rising bullion prices hit a six-year peak as gold prices climbed more than 1% to approach $358 an ounce in New York dealings.

-----(from url)-----

Dow and Nasdaq today still struggling to reach consensus, each reversing friday's separate directions. Gold continues course -- onward, upward.

R.

http://stockcharts.com/def/servlet/SC.pnf?c=$GOLD,PThe START of the "TO THE MOON, Alice" up trend !
<;-)

Yes Gandalf, they are indeed pretty. But why are they green? Goldbugs everywhere are rejoicing with chart "breakouts" on all sorts of different indicators like the HUI, AUX and the Uncle Harry index (chart on Sinclair's site). The chartist can make a strong claim that this may be the upswing that breaks $400. I'm encouraged that every new low is higher than the one before. Hamilton advises that POG will most probably not break below the 200 day moving average (which is higher every time retested!)

With the HUI and XAU really soaring, should we ask, once again, whether quality, unhedged mining stocks lead the metals' prices or vice-verse? I don't see this as a most important question as long as both advance, perhaps each at its own pace, as each confirms the advances of the other.

And sister silver? I had thought she would have made up her mind by now but whichever direction she chooses for the short term will not/can not change the fundamentals of more being used than is being brought to market. I wonder how strong that 491-493 level really is or if the 480 level has to be revisited? Either way, (imho) eventually she goes much higher.
Rich

...........on the way to 5 million bucks per oz.!!!!!

Is John fishing to see if we're reading, looking to get someone worked up enough to comment? Or, is he warning of another false rally? If so, should we sell some of our Gold shares? The bracketed dollar sign [$$$] sections below caught my attention.

Excert:
Commitments of Traders data showed the net noncommercial long position in COMEX gold fell to 57,811 contracts from 75,447 contracts in the week to last Tuesday. "The price action since Tuesday suggests they may have bought a similar quantity right back," wrote IFR/Pegasus analyst Timothy Evans.[$$$ The rebuilding of longs while gold remains in its recent trading range looks like a "recipe for eventual disaster," he added. "Even if they manage to wedge prices to a new high, there will be little or no fresh buying left to drive the follow-through,"$$$] he wrote.

Excerpt:
"The continued strength in gold prices and the weakness in the euro has led to a divergence from the gold-dollar-euro exchange rate relationship that has held since early April," said Alan Williamson of HSBC.[$$$ "Either gold is overpriced or the euro is underpriced,"$$$] Williamson added. "In the past this relationship has been subject to periodic change, although it has usually been possible to identify reasons for the change such as the ending of the Iraq war which led to a dissipation of the war premium in the gold price," Williamson said. [$$$$"At present we cannot identify a reason why this relationship should have changed and look for a correction - either stronger euro or weaker gold - over the coming days,$$$]" he added.
--------------------
Well, Mr. Alan Williamson---we can start with a half trillion dollar annual budget deficit� add to that a half trillion dollar trade deficit�pile on future unfunded total government liabilities of forty-four trillion dollar�.well, you know the rest��..Ka-Boom.

Gdome

R Powell (08/11/03; 18:07:50MT - usagold.com msg#: 107019)
Gandalf's green xxx s
---
WHY are they green, you ask ?
BECAUSE they are FRESH and the "reverse" happened TODAY. Tomorrow they will be black, AND IF a new X or two are added, THEY will be green.
<;-)

What does it mean, show, etc. We see the X's and O's, but how are they obtained, the number in a column, placement in the chart, etc. I've been following your chart, but never could figure how it's done? ---Gdome

Thanks for the suggestions. As of now the revised plan is Norway , Ireland and a bit of the UK. We have a friend that lives just north of London who used to be a pilot for a Arab arms dealer. Very interesting fellow. His home was built in 1750ish. Collects old Alfas and old motorbikes as he would call them from all over the world. He is one of those fellows that knows a lot more than he can tell you about what is going on in this world. I would be very surprised if he didn't have a few gas tanks with a little golden "fuel" in them.

http://stockcharts.com/def/servlet/SC.pnf?c=$GOLD,PI shall try to adequately answer your Question.

This type of Charting is called "Point & Figure".
It is a form of TA !!
I am not advocating the webpage Stockcharts.com, BUT they have a lot of FREE CHARTS, and I love the word "FREE" !
"P&F" charts are not time oriented, and show TRENDS.
The O's are down trends, while the X's show up trends !
the value of each "BOX" is determined by the price of the item being charted ! It is rather involved, BUT, if you go to the GOLD CHART at the above link, you can see that it is on the green "FREE CHARTS" tap at the top of the chart.
NOTE that the tap to the right of the "FREE CHARTS" is labled "CHART SCHOOL" !!! That is where you can "learn" about P&F charts at you own rate !
By my understanding of the "formation" on this Chart --
we are now at the start of an UP TREND and about to BREAKOUT of a LARGE Symmetrical Triangle, which has been formed THIS YEAR !
This Training Guide says,

"While there are instances when symmetrical triangles mark important trend reversals, they more often mark a continuation of the current trend. Regardless of the nature of the pattern, continuation or reversal, the direction of the next major move can only be determined after a valid breakout."
--
I await the BREAKOUT at the $364.+ POG level, WHICH would indicate an approx. $80, move to the next top at $444.
(WHICH is a very nice NUMBER ALSO !) REMEMBER, this type does NOT show timing !!

Good luck with your Chart Schooling !
<;-)

Gandalf leaned forward on the Oaken Table and said, I see nothing at this time and even if I did, it would not be prudent to tell you till we know exactly who you are.
I would have said the same words'said Cougar and gave Gandalf a smile.
Sir M.K. felt uneasy as the events of the day unfolded before him. Lady Waveriders,covert conversation with Sir Black Blade. The tension between Cougar and his trusted Knight. Then the quick question to Gandalf the White. All was not right. Would you be kind to let me speak to my trusted friends in private, Cougar asked Sir M.K. As you wish, and Cougar got up and left the Council Chamber. He did not return to his room, instead climbed the stairwell to the East wall and again looked to the horizon.
Friend or foe? asked Sir M.K. There was silence and each glanced at each other. He is fast to his axe at a table of peace'said Sir Black Blade. He knows more than he admits,Lady Waverider forcibly interjected. Yet Gandalf, said nothing only grasping his long white beard. If he is a friend why is he so harsh?, asked Lady Waverider.
I feel he is a man of nature. Dependent on noone'said Sir M.K. He is forced to seek alliance and who better than us.
He knows the value of Gold and that its existance is in jeopardy. Give him time. With the August festival coming he will become more friendly in his conversations with us. We will keep an eye on him and see if what he told us comes true, said Sir M.K.
I have some other business to take care of, so for now let us enjoy what is left of this sunny day. Sir Black Blade, May I have a word with you. Gandalf and Lady Waverider left the Council Chamber while Sir Black Blade remained behind.
Go into the town and find out how long it takes to build a wagon. Also if we have provisions for an extended march'said Sir M.K. Shall I send word to the Valley of Clouds? asked Sir Black Blade. Yes,that is wise, said SirM.K.
In the distance far from the sight of Cougar it had begun. A trading town set on a crossroad of trade refused to accept the terms of settlement with the Dark Force. FairHaven was its name,put to the torch in the middle of the night. The morning brought destruction and the black collums of smoke filled the air. Those that escaped walked to the West.
Sir M.K.after talking with Sir Black Blade, searched for Gandalf and found him in his Chambers. The door was still open. He saw Gandalf looking down at the crystall ball still covered with the Velvet Cloth. What do you see,Gandalf?
Slingshot-------------------------<>


Slingshot--------------------<>

golden trout are only found in the golden state.

did you see platinum leading the way today. just wait till its golds turn again. platinum then gold then silver, within 2 weeks we get an 10 -11 federal reserve note move up in the pog!

Good that you noticed. I try to present analysts comments from different points of view from around the globe. Not that I agree or disagree but that we get broad a picture of what the analysts, dealers and traders are saying. You may have noticed that many of these same analysts are quoted in the DMR over and over. Some are permabears, others are permabulls while others take a reasoned evaluation depending on changing market conditions and make a judgment call, and yet others flip-flop day to day depending on which way the wind blows whether there is any real fundamental change or not. What I find interesting is that many will be bullish one day, bearish the next and then change their position yet again the day after. For example in today's DMR, you may have noticed that IFR/Pegasus analyst Timothy Evans tends to be bearish most of the time (though not quite as bearish as perhaps permabear Mitsui analyst(?) Andy Smith who I believe is simply talking his employer's book) and frequently grasps at straws to explain why gold should be dropping lower. On the other hand Alan Williamson of HSBC may be bearish or bullish from day to day depending on how he sees the market. And yet Grady Garrett, chief trading strategist at EnergyTrendAlert.com leans more toward the bullish camp.

I try to present analysts opinions from Asia, Europe, and North America to give an all round feel for the current market sentiment. Finally I give my analysis of the market and what has triggered the most recent trading activity in the "comment" section. I think that the one glaring difference is that I approach precious metals not so much as an investment but rather as an insurance policy in an uncertain world whether it be economic or geopolitical. I mean after all we insure everything from our health and lives to our homes and automobiles, so why not our financial well being? Market analysts and those working for the investment houses have a very narrow focus of the world that we live in often spinning tales and talking their book to sell speculative stocks and bonds while ignoring the need to have a slice of protection for when the markets and economy take a turn for the worse. Ultimately how you invest and how you position yourself is your decision alone. Personally I invest in stocks and yet have a healthy physical precious metal position for insurance as well.

Much of the time you have to read between the lines when reading the opinions of market analysts. Knowing the track record and background of these individuals and the background of their employers can explain a lot as well.

- Black Blade

Sir Gandalf: Thanks for your informative explanation and links. I put the link to the gold chart you passed along in my favorites for easy access; also, copied and sent your posting as an e-mail to myself for future reference! Will get on it ! Nice evening to you.-----Gdome

http://quote.bloomberg.com/apps/news?pid=10000103&sid=aFVACK4qSNAQ&refer=us
Snippit:

Aug. 11 (Bloomberg) -- Daniel Gordon, former chief energy trader for Merrill Lynch & Co., is being investigated for embezzling $43 million from the world's largest securities firm in 2000 by disguising the theft as an energy trade, according to a letter written by a U.S. Justice Department prosecutor and interviews with Canadian law-enforcement officials.

Merrill Lynch, based in New York, hasn't disclosed the loss in public filings. Gordon sent the money in 2000 to a Caribbean-incorporated shell company he controlled, according to the Justice Department letter. Merrill, the largest securities firm by capital, said in a civil-court filing on July 14 that it recognized the possibility of ``the alleged fraud.''

The embezzlement would be the largest employee theft from a financial institution, said John Coffee, Adolf A. Berle professor of law at Columbia Law School, where he directs the Center on Corporate Governance. Frank Partnoy, a securities-law professor at the University of San Diego School of Law, said the case suggests Merrill's oversight and control of its executives was inadequate.


Black Blade: I would say "inadequate" is putting it mildly. "Interesting times"

http://www.atimes.com/atimes/Middle_East/EH12Ak01.htmlThe url above discusses "Iran's bout of irrational exuberance" -- The Tehran stock market has been skyrocketing since March, spurring concerns that it is about to join the rest of the world's bourses in a popped bubble.

Classic. Et tu, Brutus? ...er, Iran.

Excerpts:

(August 12, 2003) -- The Tehran Stock Exchange (TSE), recently one of the world's most torrid performers, has been a source of government pride since its revitalization in the 1990s. It has soared upwards by about 80 percent since March. Now, however, it is fast becoming a reason for concern as officials attempt to cool things off before it crashes.

Tehran, it would appear, is in the grip of irrational exuberance, leaving exchange officials in a quandary. Last week, the exchange's management, beset by increasing fears of a popping bubble, stepped in to forbid brokers to increase prices for two weeks.

At least three major factors have contributed to the TSE's impressive gain since early 2003. One has been inward remittances by Iranians residing abroad, especially in the United States, of a huge amount of money over a relatively short period of time, a phenomenon that began a few months after the September 11 terrorist attacks. In the absence of any official statistics, the repatriated amount is estimated at US$7 billion to $15 billion. Added to that is an inflow of Saudi investment in Iran, an indicator of warming Iranian-Saudi ties.

Another factor has been high oil prices...

Finally, the third factor is private investors, large and small, who have been piling into the market in search of quick profits. It is a market axiom that when the last of the retail investors get in, it is time to get out.

...high rates of hassle-free return over a short period of time have attracted many investors.

This availability of a large amount of cash has contributed to a rapid increase in demand for shares and has driven share prices through the roof, luring retail investors with the hope of making significant profits fairly easily - the elements of a classic bubble.

...That was the situation that persuaded TSE management to intervene despite its possible long-term negative impact on investors who could lose their confidence in a stock market whose natural performance could now be manipulated by its management, a scenario with a decreasing profit rate on their shares.

----(see url for article)----

This passage from the article caps the point nicely.

"A crash would diminish confidence in the TSE, obviously affecting negatively all the enterprises and individuals involved in it. A prevented crash through repeated interventions would sharply reduce investor confidence in the TSE, which could lead to the outflow of large amounts of cash."

Yet another segment of the global population that is poised to be brought closer to gold, bringing more pressure to bear on the physical market. Conditions continue to align for the "perfect storm".

R.

I have recently become interested in TA and have purchased an excellent book entitled "Technical Analysis of the Financial Markets" by John J. Murphy. It is extremely well written, easy to understand and user friendly. I highly recommmend it should this be an area of interest for you. Cheers,
Waverider

The thought had occurred at the time that perhaps a balanced point of view was being presented to show that there are opposing views. However, I just chose to react, to jump it. I have seen planted nuggets placed in editorials to arouse attention, draw comment, to see if people are paying attention. As the Opinion page editor of our local newspaper once remarked, after some scathing feedback on some outrageous proposal he presented in an editorial, laughing--"That's fine; at least I know they're reading it."

On the metals--I too hold the physical in-hand,in perpetuity, or as in the old days with a wife, until death us do part. The shares are another matter. I have some (about 3,500) in a 401K and need to look to trade out into money market--at least part of the position if things look to go into another funk. The fund now stands at it's highest level for years. So, the statement about selling (some)shares was a serious one. ----------Gdome

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1059478917380Snip:
"As evidence mounts of a revival in the US economy, expectations of a rate cut at Tuesday's meeting of the Federal Reserve Open Market Committee have evaporated. But there are hopes the Fed may offer some comfort to the suffering bond traders in the statement accompanying their interest-rate decision. Since the middle of June there has been a 40 per cent rise in the yield of the 10-year treasury bond, from 3.116 to 4.37 per cent. A further significant rise, economists said, would start to undo the US central bank's good work in cutting rates. Marc Chandler, chief currency strategist at HSBC in New York, said the Fed should try to calm nerves in the bond market. "If 10-year yields rise another 50 basis points it may start to dampen the recovery in the US economy," he said."
Waverider: Let's see if Greenspan is able to talk down the bond market today!

Greetings!

In Sunday (August 10th) New York Times Money&Business section, there is an article "What Investors Should Do Now". It basically said "gee ... the stock market is overvalued, ... the bond market is overvalued ... is there any asset class that makes sense when the short term interest rate is below inflation rate?"

I do recall that all the investment books in the mid 1970's-1980's mentioned precious metals and other tangibles as worthy investments along with stocks and bonds. Yet somehow we now live in an age when gold has been rendered invisible, as if removed by an invisible coup. It reminds me of Kremlin watching, when people would look at a parade reviewing stand and try to identify who was seated close to the premier. Our agents would decide who was in and who was out.

If I am not mistaken, gold is an excellent investment choice when the short term interest rate is below the inflation rate.

The article does make some great points. Do not tie up your money in long term fixed income investments. Be aware that reducing your fixed monthly expenses is just like adding vast amounts of capital in a low interest rate environment.

Yet ... what about gold?

------------------------------------------------

In the interests of diclosure I will say that I have invested a lot in precious metals (physical and stocks). Virtually all have done quite well. My favorite moment in my financial career was accepting 200 oz of gold 9sold by our hosts) from a Fex-ex driver. He said "car parts??" I said "Uh huh!". By the way, each of those ounces was purchased for about $273.

Do you think we should remind the New York Times of the existence of the forgotten asset class?

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1059478927026&p=1012571727304Snip:
"What has been going on in the bond market over recent weeks? The turmoil in the market has resembled the chaos that occurred in 1998 when Long-Term Capital Management collapsed or the annus horribilis of 1994 when a sudden tightening in US monetary policy caught investors on the hop...

How bad could it get? There are some who believe that Freddie Mac and Fannie Mae are the potential Achilles heels of the US financial system. Indeed there have been reports that the European Central Bank has advised other government banks in Europe to reduce their exposure to their debt. A further rise in Treasury bond yields could release an immense amount of selling in the market. Tim Bond, of Barclays Capital, estimates that another 25 basis points rise in yields could prompt $180bn of sales in the 10-year swap market. In the past, such rapid market movement has caused distress in the bond market. One has the feeling that someone, somewhere has just lost his shirt.

Waverider: A good article explaining the intricacies of the current bond market.

BTW White Rose - yes, I'd encourage you to write the editor.

Do you think we should remind the New York Times of the existence of the forgotten asset class?

*** No. They already know it. The omission was not a mistake. It was intentional.

I agree with you, but not speaking out about something you feel strongly about is the same as condoning it. Who said..."All it takes for evil to prosper is for good men to remain silent"..or something along those lines. They should know that there are people out there that don't agree with what they write. You likely will not change their opinion, BUT you may plant a seed that will sprout forth some time in the future. Cheers,
Waverider

Yes, I knew the ommission by the New York Times was intentional. I also know that if I write a letter, they will not print it. Knowing that, and reading it made me feel very frustrated. In fact, I was so angry, I thought is was best not to write about it. I was sure someone else would mention it. So I was a bit surprised that no one here started ranting and raving about it.

"...not speaking out about something you feel strongly about is the same as condoning it."

*** This is perhaps true legally. In criminal law, silence is interpreted as consent. But in life, silence is sometimes merely silence, and sometimes it is an understanding of proportion. The good seed that you hope for is not garaunteed. Few letters get published, and the person who wrote the story would most probably not read your letter. If he did, his reaction would probably be rejection or denial, not learning. To get somebody to really change their mind usually takes a lot of effort. To write a really effective letter takes a day or more, in my experience. And you have to direct it to an individual who can make a difference. At The New York Times you have no way of knowing who that would be. And if you are going to invest the time finding out, that time could be better used in other ways. Also, if you will consider that the content of published pieces tend strongly to be in line with the editorial intent of the publication, you will be right. These people know very well what is expected of them, and they do not deviate from it. Still, being able to write an effective letter is a good quality. I wouldn't waste my time sending one to the Times though. The time spent writing a good letter would be more usefully invested in directing your concerns someplace where it can make a real -if smaller and less hopeful- difference. Additionally, there are plenty of circumstances in which speaking out about something is not the best approach to improving things. All this notwithstanding.... Now. If several hundred people all sent angry emails to the editor, that might achieve something.

http://biz.yahoo.com/rf/030812/economy_fed_openmarket_1.htmlNEW YORK, Aug 12 (Reuters) - The Federal Reserve said it took no action in the open market on Tuesday.

R.

Here is a copy of the email that I have just now sent to Arthur Sulzberger, Jr., Chairman and Publisher of The New York Times. I found his email address on The New York Times' web site. I am sure nothing will happen because of my tiny little email. But I am not out much, because it all took only a few minutes. No printing. No envelope. No stamp. No trip to the post office.

...

In your August 10th Sunday edition, in the Money and Business section, the article "What Investors Should Do Now," reveals an outlook of profound ignorance regarding current -and historically successful- investment strategies.

Certainly any financial writer worth his wage must be aware that gold is an asset that offers promise whenever there is a national situation such as the one the United States is now in. Although the writer knows that the stock market is overvalued, that bonds are overvalued, and that the short term interest rate is below the inflation rate, the writer could offer no suggestion as to what course of action an investor can take to protect himself.

Your staff should do their homework. Gold is the principle answer to this question.

That your staff did not know this is both surprising and disappointing.

There will be little choice, from now on, in my taking your publication as being somewhat compromised, in its ability to inform me of what is in my interest, financially.

Very Sincerely Yours,

[Here I placed my real name
and email address.]

(White Rose and Waverider, please take notice of the fact that the matter is correctly the concern of the publisher, not the writer, because -at least ostensibly- it is a matter of staff incompetence.)

http://www.usagold.com/gold-coins.html

Kudos to you!! Remember that whether you find out if "anything happens" is really secondary - icing on the cake. The important thing is that you voiced one's opinion in a dignified, articulate way. YOU may not receive the fruit of you labour in terms of receiving any feedback, BUT you may have an effect in the grand scheme of things in ways that aren't for you to know or understand. My hat goes off to you, Cheers,
Waverider

Oh they are for me to know and understand alright. It's just that after I wrote my first, wimpy, post this morning, the idea occurred to me -in line with your suggestion- that something could be done. Not much perhaps, but something. A small action sometimes can make a very big difference. (Writing to the Times itself, however, is an activity I would still not undertake, for the reasons I mentioned.) Thanks for the appreciation. It has made my day.

http://stockcharts.com/def/servlet/SC.pnf?c=$GOLD,P"Small World", is it not ?
--
At the Chart link, at the top of the Chart, is the green tab labeled "Free Charts". Adjacent to that on the right hand side is the tab "Chart School", BUT, two tabs further to the right is a tab labeled "John Murphy" !!

YES, that is the same John J. Murphy, that is the ---
Chief Technical Analyst, Stockcharts.com
---
BTW, I am NOT John. J. Murphy !
<;-)
Gandalf the White, Goldheart

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B75047D5A%2D7D4F%2D48D7%2D82F5%2D1E315A09C8A2%7DHEADLINE: Miners rush to finance their ventures

(Calandra, CBS.MarketWatch.com) --- A $10 fillip in the price of gold has sparked a spate of miner financings in the stock market.

...On Monday, gold's spot price was up $4 to $360 an ounce. It would appear the mining sector is attracting interest on an increasingly nervous Wall Street, where technical and fundamental analysts are forecasting sharp gains for gold, silver, platinum and copper.

"The Commodities Research Bureau Index just broke out higher, and base metals are climbing slowly," says Robert Bishop of Gold Mining Stock Report. "It's a friendlier environment for metals, and hey, where do you put your money these days?"

...the "rock stars" of the mining world expect gold and related metals prices to soar in coming months.

Pierre Lassonde of Newmont Mining, the world's biggest gold producer, just forecast the metal would notch at least $450 in the coming year as the U.S. dollar continues to deflate and the Chinese, recently permitted to own and trade gold, increase their purchases.

Frank Veneroso, a mysterious but revered asset manager and gold economist, recently published what some say are his first printed comments on the gold market in several years. Veneroso ... said in an article in Brien Lundin's Gold Newsletter that "we have reports that, in the wake of Sept. 11 and the Bush administration's war on terrorism, Islamic institutions and wealthy Islamic individuals, fearful of a U.S. seizure of their assets, converted dollar assets into gold."

Veneroso, said to be forming a new gold fund for large investors, also says buying in China and hedge-book buybacks by large gold producers are some reasons for gold's rise. "All of this buying, taken in the aggregate, must have represented demand for thousands of tons of gold."

-------(click url above for the full article)------

Reprise: "It's a friendlier environment for metals, and hey, where do you put your money these days?"

Make sure you are not merely left on the outside of this important asset class looking in, and do not short-change yourself with only paper proxies for gold. True diversification requires metal, and only through its ownership can you fully claim its value as a portfolio diversifier against the adminstrative hazards of paper assets. Call Centennial today to discuss the asset mix that is right for your lifestyle and your financial goals.

R.

I've a question. In an earlier post today Waverider said he purchased 200 oz of gold which reminded me of something I read on another site (I forget where at the moment) about broker reporting. Among other things (bars of Ag, Pt and Pd) it said that any sales of 25 1-oz gold coins or more must be reported.

Just exactly what is reported? Only the fact that a sale for that much was made? Or does the buyers name, address, SSN, etc get reported?

And what about if smaller amounts are purchased. Do they (brokers, uSAGold, etc) require or keep info about a person anyway? TIA

Renny

http://www.marketwatch.com/news/story.asp?guid={087CEDF8-B3E4-4E67-B662-3A343A584353}&siteid=yhoo&dist=yhoomore&archive=trueSAN FRANCISCO (CBS.MW) -- Gold is gaining favor among Wall Street's analysts, brightening prospects for a new round of paper-gold securities.

Yet even as banks such as UBS declare this week that the metal is in a "new secular bull market," the most anticipated of the new paper-gold funds, one that was anointed for the New York Stock Exchange, appears to be behind schedule.

Equity Gold Trust, sponsored by the World Gold Council, filed an initial S-1 registration with the Securities and Exchange Commission in mid-May. Hopes were high that the proposed exchange-traded fund would launch on the NYSE this summer.

Now there are signs the new fund, caught in a hornet's nest of regulatory issues, may miss the summer entirely. Bankers and others familiar with the situation say the gold industry group that is backing the idea is grappling with concerns about the custody of stored gold, as well as the fund's tax status.

..."This baby has had a pregnancy longer than an elephant's," one noted metals analyst told me. "The deal-wobbler, if not breaker, is the facility to pick up physical gold."

Indeed, nowhere in its 200-page SEC filing does Equity Gold Trust explain precisely how British bank HSBC, its proposed trustee, would go about shuttling allocated gold from an investor to a London vault.

...As recently as Thursday, chief technical analyst Peter Lee and his team at UBS declared the precious metal was "within the consolidation phase of a new secular bull market." The UBS technicians, joining several other major investment banks in their growing enthusiasm for the metal, said, "it looks as if a breakout above $375 an ounce is the key to unleashing another bull run from the metal. If such a breakout should occur, we would be looking for targets first toward the $425 zone, then closer to $500."

The chances of accelerated inflation and a continued decline in the dollar have banks such as Merrill Lynch and Goldman Sachs starting to recommend 5 percent weightings of gold in clients' holdings.

-------(see url to read full text)------

By contrast, there is nothing complicated or obscure about gold, wholly owned as property in possession.

Converting paper earnings and winnings into the tangible and timeless wealth of gold is one of the easiest and most natural acts a person can do -- provided they conduct their business with a reputable and professional firm that puts the customer's needs at the fore. Call USAGOLD-Centennial today for a breath of fresh Colorado air for your soul and solid gold for life.

R.

Gold sales are reported on IRS form # 1099 only when YOU, the client, sell to a gold dealer/broker 25 ounces or more of the following items:

Maple Leafs
Krugerrands
Mexican Onzas
Gold Bars

There is quite a bit of confusion on this issue. There is no reporting requirement when YOU, the client, purchases gold from a gold dealer/broker.

We consider reporting requirements to be a relatively benign issue in that US citizens are responsible for reporting their investment gains annually anyway. Even if you purchase an item not listed by the Treasury Department (like the US Eagle for example), you must still report any capital gain accrued upon sale.

Renny (8/12/03; 11:56:39MT - usagold.com msg#: 107049)
Waverider - 200 oz. gold
===
It was White Rose, and not Lady Waverider, that earlier today spoke about the "auto parts" delivery.

I can advise you that Brokers require NO PERSONAL INFORMATION when a gold purchase of less than 25 oz. is made. I am sorry to advise that I know nothing about the purchase of 25 oz. or more as I have never made such a LARGE purchase at one time. I am sure that USAGOLD Centennial Precious Metals Inc. can advise you about the REQUIRED reporting regulations of Gold purchases.
Interesting question though !
<;-)

http://www.usagold.com/cpm/privacy.htmlNotably, the reporting requirement (the ubiquitous IRS Form 1099) kicks in when you as a client SELL gold above the threshold (based on particular form of gold -- bars, Canandian Maple Leafs, SA Krugerrands, Mexican Onzas). Reporting requirements do NOT apply when you PURCHASE your gold.

See url above for more, and feel free to discuss these matters more fully with one of the friendly and knowledgeable gold brokers at Centennial. The call is toll free, and they would be happy to help satisfy your gold diversification goals.

R.

while saying things are improving. They want to keep rates
low as the US piles up huge trade and budget deficits.

GOOD LUCK!

8/12/03 FED SEES DEFLATION AS MAIN RISK TO ECONOMY
08/12/03 FED NOTES U.S. ECONOMY IS IMPROVING
08/12/03 FED SAYS RATES CAN STAY LOW FOR 'CONSIDERABLE PERIOD

????
U.S. 10-YEAR NOTE UP 3/32, YIELDING 4.34% VS. 4.35%

<;-)

Many thanks for clearing my confusion, good folk. I have never purchased that much in one shot (as far as I can remember) but not knowing was causing some concern.

As for selling some of it, no thanks. Not for sale. It's my insurance policy for when everything crashes. I just hope I have enough for that day. I think at present my holdings are about 14% of my total assets. But it's always nice to be increasing that amount, which I may be doing again here soon. When it arrives at my door and I open the box...oooooooohhh my, it's soooo pretty. :^)

Renny

Sorry to diagree with some of you when you say gold sales from client to broker/dealer are not required to be documented. In Ohio, ANY amount of gold sellings from client (Joe Sixpack) to gold dealer is required to be documented with name, address and ID such as your drivers license. Even if it's 1/20 ounce.

This is mandated by state law. I don't have the ORC (Ohio Revise Code) cite handy but will post it if I find it again. The government wants to know who has gold to sell and therefore who posses gold.

http://www.federalreserve.gov/boarddocs/press/monetary/2003/20030812/default.htmPRESS RELEASE August 12, 2003

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with still-robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period shows that spending is firming, although labor market indicators are mixed. Business pricing power and increases in core consumer prices remain muted.

The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level. The Committee judges that, on balance, the risk of inflation becoming undesirably low is likely to be the predominant concern for the foreseeable future. In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Robert T. Parry; and Jamie B. Stewart, Jr.

--------------

In related news, Mother Nature released a statement saying her gold policy remains unchanged -- her tight fisted grip on gold within the bones of the earth would continue unabated and regardless. Miners wept openly at the news.

R.

A great place to visit...

R.

Don't limit the pleasure of your senses to just sight. Pass a few coins from hand to hand. What's that sound ?
Clink!

PS. But let's not get too enthusiastic. The hoped-for smell of security is cerebral only, and I hurt my teeth the last time I chewed on one .....

have a rather nice sound, don't they? I don't go in for chewing on them, though. I rather envision myself swimming through a full vault of them. Kind of like old Scrooge McDuck. (sigh) It is nice to dream. :^)

Renny

What a hoot.......

http://www.reuters.com/newsArticle.jhtml?type=topNews&StoryID=3258802Has Freddie, Fannie ever had to "manage risk"? Their very creation obviated ever even acknowledging the risk. Get real!

The 25 ounce threshold is new to me - one of the many things I have learned from this esteemed group.

There is also a $10,000 cash threshold. This comes into play when moving cash around. If I:
> Withdraw more than $10,000 in cash from the bank,
> Purchase more than $10,000 in precious metals with cash across the counter, or
> Travel through a U.S. border with more than that amount, I am presented with a report form that is, I believe, from the federal government.

These real-life experiences are all I know about this cash limit. Can anyone shed more light on this?

- Survivor

http://www.business-standard.com/today/story.asp?story=20169Certainly the mainstream media is entitled to peruse the surface skimmings from the old brewing cauldron overflowing with financial irregularities and disorders.

Back from travels in France, which doesn't look to me as if it's about to keel over and die any time soon. Random thoughts:

1. Looking at DIVG index ($ gold price x US dollar index), we had a high around 365 and a low around 305. Back of envelope Fib analysis identifies 352 as key level (78.6%), the theory being that if we break this, we jump to next Fib around 127.6%. Evidently, we have 2 variables - POG and USDI. Let's assume POG breaks out and USDI goes down from 96.2 to 91 ($ could go further, but appears to me that there is a gentlemen's agreement between the Fed and the ECB to put the brakes on the Euro) - this translates into a USD breakout point of 352/0.962 = $366 and an objective of 381/.91 = $420.

With all due respect to Gandalf, I like P&F for quick and dirty analyses, but have a slightly different method for calculating targets:

Upside target = Trading range low + 3*(horizontal box count)*box size.

We can see from the link that the TR low is $340, we have a 7 column TR ($4 per box), so our upside target is:

340 + 3*7*4 = 424.

Astonished that the two numbers converge? Well, my hunch is that P&F also follows Fib principles although I've never found a formal demonstration of why the P&F target method works anywhere in the literature (perhaps someone can enlighten me on this).

2. Very intrigued by Jim Sinclair's analysis of St. Louis Fed numbers, showing major slowdown in MZM.

My hunch as to what's going on is as follows (and this is purely a hunch): We're seeing a kind of replay in the US of something that happened in Brazil in 1992, with the impeachment of Fernando Collor.

Brazil had its first open presidential election after 21 years of miilitary government in 1990. The ruling political elite were so discredited that they couldn't come up with an electable candidate so they decided to back a maverick populist with a shady private life from a non-existent party to keep out the left, throwing the full weight of the main Globo media empire behind him.

Slightly closer scrutiny showed that Collor came from a very well-established although rather unruly political family from the Northeast that had very close links with the establishment and the outgoing, discredited and unelected president, Jos� Sarney, but these were played down and the electorate swallowed him.

On account of these links, the Northeastern establishment automatically assumed that he would follow their orders. They soon received an enormous shock, discovering that he was stealing from government with such impunity that by the end of his term he was likely to have amassed enough money to finance a rival political empire.

It was clear to them that he had to go and a flurry of secret dossiers was handed to the Workers' Party whose candidate (Lula - now president) he had defeated. Collor was summarily impeached - a great triumph for Brazilian democracy (although it should be noted that the big chiefs had to quell a rebellion in the ranks, who actually wanted to be bought off).

Since Collor had initially been painted in neo-liberal colors, his removal ushered in a period of enormous uncertainty and the first wave of foreign investors who had bought into Brazilian stocks saw their investments plummet, while the local banks cleaned up on the currency devaluation (as they always do).

Now, note the parallels:

-The mainstream Republicans can't find a decent candidate, so they choose the unstable scion of a local dynasty, whose real loyalties are to marginal groups in political terms as well as to his father's business cronies.

-It soon becomes clear that he and his friends are running the show and don't see any need to collaborate with the party as a whole.

-The actions of this group are so radical that they start to alienate trading partners/muddy the waters for US business overseas/embark on reckless deficit spending in order to fund their own feeding frenzy/override traditional government institutions - this evidently threatens the tenure of many bureaucrats/politicians at all levels.

Now if this scenario plays out according to the script, the political elite that elected Dubya will have him removed by one means or another, and many fortunes will be made by insiders betting on the economic carnage that will accompany his removal. Brazilian banks nearly always make indecent profits on currency devaluations/major macroeconomic adjustments - why not Wall Street?

Evidently, he may be able to outbid his backers, but if so, why are so many of his circle jumping ship or refusing to come on board? Perle, Fleischer, Fisher, Poindexter. Kissinger - and probably Greenspan, Powell and Rice?

As always, Dubya's undoing will be through the economy - large sections of the US electorate will suffer such a blow to their standard of living that no amount of evidence for Saddam's WMDs or even another 9-11 style terrorist event will lift them out of their terminally foul mood.

It thus seems to me that the St Louis numbers are a sign that the financial �lite is already turning off the taps and preventing the credit creation that is required to keep the bubble afloat.

Any thoughts?

What times we live in!

The august FOMC issued a statement carefully worded to avoid mentioning that nasty term: DEFLATION.

What a bunch of jokers!

"unwelcome fall in inflation" instead of, "unwelcome deflation"

"inflation becoming undesirably low"....Hmmmm....so inflation is OK, as long as it is not "undesirably low"??
How about "desirably low inflation"? Would that be OK? - In plain English, "Deflation threatens".

"The risk of inflation becoming undesirably low is likely to be a predominant consern for the foreseeable future."

Translation: "Deflation will be a threat from here on".

*****

Greenie deserves his nickname: saw him on BBC and he looked green as grass and all wrinkled, he has aged enormously, and looks for all the world an old chimpee. What a fix he's gotten himself into! No way out. Disaster awaits no matter what policy is adopted. The barn has burnt down; no policy will alter the ugly fact.

Guano from the GAB

Comments:

Deflation: It is only an apparent deflation because of
such a vast importation of high quality goods
manufactured in whole or in part abroad, sold
at a reasonable price.

The sales increases at the retail stores
reported last week were accomplished by the
sale of mostly imported goods, clothes and
other items.

This is good for the consumer. But in
certain high tech areas, such as computers,
the U.S. should try to maintain a more
leadership role, so as not to be completely
dependent in years to come, on foreign based
manufacturing centers.

Long Term
Bond Yields They rose today after the Fed announcement.
This means that long term bond prices are
still under pressure. This also means
that home mortages will continue to trend
higher in terms of interest rate, and will
eventually put a cap on home prices.

Ax

In Colorado, coin dealers are required to take personal information on all purchases. This is to ensure that the items are not stolen, and not to keep a database on who is buying and selling precious metals. The local dealers have assured me that their records are destroyed after a couple of weeks, and I have no reason to doubt their word on this.

Welcome home! And back to the Forum.
Your parallels between Dubya and Brazil's Collor may be on target but I'm not able to judge that. However, the liklihood that GB the Junior will be a one-termer like his father is a bet that I'd like to take. He's got too many balls in the air to prevent one or more from falling.

Boilermaker

For practical purposes, the Federal Reserve has only two weapons, both designed to signal the depth of its marvelous intellect and understanding to Wall Street's admiring buy side and sell side. 1) The arbitrary establishment of the federal funds rate. 2) Jawboning. The Fed does not send signals about its wondrous insights by increasing or decreasing the level of bank reserves via its daily open market operations. Bank reserves are equal to a tiny fraction of the money supply. Required Reserves for the two weeks ended 8/6/03 were only $42.3 billion -- compared with M3 for the week ended 7/28/03 of $8.9 trillion.
Only a portion of demand deposits are subject to reserves, and when the commercial banks create new money through new loans no additional reserves are required as long as the money quickly moves out of those deposit accounts and into M2 and M3 categories. Through thick and through thin in recent years, Required Reserves have changed very little. At the end of 1999, when the Fed had to acquire huge amounts of securities to offset the huge increase of Currency in Circulation (CIC) triggered by the Y2K panic, M1 was about $1.1 trillion (not all of it subject to reserves) and Required Reserves were $40.5 billion. Now M1 is about $1.3 trillion and Required Reserves are $42.3 billion.
More later.

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=3251587NEW YORK (Reuters) - Chinese officials plan to tell U.S. Treasury Secretary John Snow they
might reconsider the country's hefty buying of Treasuries and U.S. agency debt if Washington
doesn't cool its calls for China to revalue the yuan, according to a report seen by market
sources.

http://www.unclefed.com/Tax-Help/HTML/p1554.htmlThis may help.

With today's release by the ECB of the Eurosystem's consolidated financial statement, we see that international reserves, in the form of the net position in foreign currency, has been trimmed this past week by a value of 0.2 billion euros. The books stand now at EUR 195.8 billion, well down from the heyday of the U.S. dollar just a couple years back.

The value held in the form of gold and gold receivables remained unchanged over the week at EUR 119.993 billion.

Were the quarterly revaluation to occur now rather than at the end of September, the books would receive a modest gain (on the order of one percent) with respect to the net position in foreign currency, while the value of gold held would climb by over five percent.

The Eurosystem's gold holdings, although just 60% the size of the net position in foreign currency among international reserves, is thus far in the course of the summer outperforming the currencies on an outright (sum total) basis. That is, the foreign currency position would gain approximately 2 billion euros in nominal value while the gold position would gain over 6 billion euros.

Indeed, over the life of the euro, the value of gold, held both privately and by the Eurosystem (or just about any other entity you could name), has done very well.

Do you think this is all by random chance, or by design? "BWAaah HAW Ha ha haaaa..." (sinister-sounding laugh).

You, too, can laugh with the same joyful assurance of one in control of their destiny. Call Centennial this week and discuss a gold diversification strategy that fits your financial needs and goals.

R.

http://biz.yahoo.com/rc/030812/minerals_cambior_1.htmlORONTO, Aug 12 (Reuters) - Cambior Inc. said on Tuesday it will all but wipe out its gold hedging program
by the end of 2004 while the Rosebel project in Suriname is on schedule to sharply boost production early next year.

The mid-tier producer, whose hedging program nearly
pushed the company into bankruptcy when gold prices
surged in 2000, said it will slash its hedging to 50,000
ounces by the end of 2004 by accelerating deliveries
and buying back positions.

http://www.iii.co.uk/shares/?type=news&articleid=4719871∾tion=articleLONDON (AFX) - The gold price dipped in midafternoon trade amid a lull in recent fund buying, although it looked poised to make further gains, analysts said.

Just saw a CNBC scrolling line (I keep the bubblelonians on mute) saying Moody's has put Sun Microsystems under review for a possible downgrade.

Have you perchance been reading the Great Mogambo Guru?
"BWAaah HAW Ha ha haaaa..." (sinister-sounding
laugh).

Max Note: This is not a funny laugh

When buying silver bullion can any one see any advantage the silver eagle has over generic bullion rounds.I am only asking about purchases of silver in 1 ounce form no 100 ounce bars or 10 ounce bars.The only advantage I see the eagle having is its currency aspect and if you want that the canadian one ounce coin has a five dollar canadian value.Does anyone see any advantages in the silver eagles?21

Although REQUIRED Reserves are calculated as a percentage of certain deposit accounts, the various items on the Fed's balance sheet (published every Thursday afternoon) affect TOTAL Reserves -- the assets on the balance sheet supplying reserves and the liabilities absorbing reserves. Through the daily open market operations the factors supplying reserve funds (the largest being securities holdings) are maintained at a level $1 to 2 billion in excess of the factors absorbing reserve funds (the largest being Currency in Circulation). Total Reserves available to meet Required Reserves consist of 1) the difference between the supply factors and the demand factors, termed Reserve Balances with Federal Reserve Banks, plus 2) member bank vault cash earmarked for reserve purposes.

To implement its policies as a would-be central planner of the US economy, the Fed arbitrarily changes the federal funds rate from time to time and engages in Fedspeak all of the time. But when it does those things, Total Reserves, Required Reserves and Excess Reserves (Total minus Required) remain largely unaffected. When GDP growth is deemed unsatisfactory and the Fed "eases" by lowering the federal funds rate, it calls its policy "accommodative" -- but the experience of the last few years shows that "accommodative" means rewarding speculators and reckless, debt-laden spenders and punishing savers.

In the preceding message regarding the Fed's weapons, please delete "$1 to 2 Billion" in the second sentence of the first paragraph and add a fourth sentence in that paragraph: "Year in and year out, Total Reserves are maintained at a level $1 to 2 billion in excess of Required Reserves."

JonathanMy order arrived today. A special Thanks to one of unsung Heroes of the Gold Saga.

He puts Gold in our Hands.

Slingshot------------------<>

So...China keeps the Yuan pegged to the Dollar (thereby staying in a winning position in the devaluation game), lures the U.S. manufacturing sector to relocate to asia where costs are cheaper, continues to build it's gold position and keeps exporting its deflation to us till all the western financial markets have blown up, half of Europe and the U.S. are out of work, and gold is the only trusted money left (and astronomically priced, to boot).
I see China winning WWIII without firing a shot.
Can someone point out to me where I'm wrong?

Simply
"Just because you're paranoid, doesn't mean there isn't someone out to get you."

It's very easily understood why the Times didn't (and won't) put its ink to work instructing its readership in the finer arts of Gold ownership.

It all comes down to this sorta thing. "Give a man a fish and he'll eat for a day. Teach him how to fish, and he'll sit in a boat and drink beer all day."

Surely y'all didn't think life would be as easy as all that did you, that the Money & Business section of the newspaper could just dole it out like it were a no-brainer? Nope!!

See, it's a very special club we belong to, and the regular sorta day-in and day-out privileged folks of the world aren't gonna be gettin' in on it as easily as a light read over their morning bagel and coffee. They're gonna hafta earn it like every one of us here did -- with personal initiative that pays off in a more worldly understanding. All with a little help from our Friends (of Another), when we can get it!

Gone "fishin' "... again. (And I can, I assure you, because nobody ever *gave* me anything!)

Gold. Get you some. And I'll bring the boat around. --- Aristotle

Why I Buy Gold You have to take a look around you and then the reasons to buy gold will be elementary. I see a generation/society hell bent on maintaining a lavish lifestyle well beyond their financial capability. Style is all that matters and one upmanship is the rule. Plasma T.V.'s at $3000.00 and some SUV's that cost more than my home. The ever expanding lenght of time for a car loan (84 months) at 140% refinancing. It used to be a family loosing its income had two weeks pay to live on. Now its payday to payday in an increasing sevice oriented job market. No savings and they draw what is left of the equity from their only possible saving asset and that is their homes.
Observation:
I have never seen more expensive autos in my jobs parking lot than now. Lexes, Jags and Four wheel drives loaded to the hilt. What is wrong with that? Nothing except that these autos were brought at a time when the job had a abundant amount of overtime. Now stay with me on this.
We have a sounding board where employees can present their problems to management. One such letter said that it was the right of the employee to be given steady overtime. He was upset overtime was curtailed. Do I sense he is having trouble making payments? What a PEA BRAIN. Will he buy Gold? NO! He can't for he is too far in debt. Can You?

Has Gold in the past year given a better return than your Bank?

Again I say One Ounce at a Time if you can afford it,but 1/10, 1/4, 1/2 adds up if you have a steady acquistion plan and stick to it.
The simple fact is that my post may be redundant to those grace this Forum. To the Lurker,he may ask what qualifys me to make such a post. Just what I read and see around me. What I hear from those who struggle to make ends meet. It will not be better for them in the future.

So, my fellow goldbugs ,don't give up on your loveones and friends when they turn a slanted eye upon you.

The winning over of just one is payment in full for your troubles.

Slingshot-----------------<>

Is it just me, or does anyone else out there open up a web site, and get totally bamboozled by Fibionachi retracements, moving day averages, cup and handle patterns, upside down head and shoulders formations, and all of the multifarious tea-leaf reading techniques of the TA crowd?

Do any of you actually make any money out of TA? This is not a silly question, it's just that I can foresee a significant proportion of my time being spent on learning this arcane art, to the detriment of time spent researching the market.

If I were an extraodinarily successful tea-leaf reader, I for one would not be sharing my secret with another living soul.

Any comments?

Cheers, GS

http://www.gold-eagle.com/editorials_03/wood081303.htmlBy Tim Wood, who has done some great work on cycles. That's all I need to know, as I'm not interested in the short term "ripples".

In all probability we're in a l.t. bullish cycle for gold. Where else would you want to put your money? cb2

I'm sure technical analysis has it's place, though in 30-odd years of involvement in markets and PMs, I haven't seen a single "system" that is consistent in it's results. No matter how it is charted, it is all past history, and mankind being as we are, a very unpredictable animal, never quite seem to do what we "should" do according to what the charts dictate. Human emotion and the tide of change is rarely "predicted" until after the fact........ 8^)

As far as keeping a workable system "secret", therein lies the root of success to most that do manage to have some semblence of accuracy. The more people you have following a certain system, the more likely "self fulfilling prophesy" comes into play.

For instance, if you are following stocks using a proprietary system that "only you" know about, chances are that any trades you make will have nil impact on the stock itself. On the other hand, if millions of people (or a few very well heeled ones) share the same system or trading strategy, and act upon it, the effect on the same stock is exponential to any actions of the single trader.

The trick of a good "system" is more often in the marketing of the system itself than in the accuracy of the philosophy behind it.

Not only do I think you are right in your assessment, but you could usefully go further.

China has successfully resisted the normal developing country trap. If a country wants to expand, there are always loans to be had (with small greaser payments for the elected facilitators) from the IMF, which then dictates that in return the 'target' economies are opened up to free market forces. Because the economies invariably don't perform as successfully as planned (or was this the original plan ?), the debt payments overwhelm the developing countries, their local currency is bombed, the local economies crash, and US and European companies buy up all the useful asset at fire sale prices.

This happened in SE Asia, S America, Russia, Africa, etc. China remains relatively opaque to outside control. While some see this as unfair business tactics, they probably see it as the only way to survive. In the process, they will probably take over the world as you say.

I seem to remember it was in 'The Creature from Jekyll Island' that I read that the big banking families succeed better than governments for two reasons. The first is that their timescales are much, much longer compared to the 4-7 year terms of various elected leaders so they can plan more effectively. The second is that they are extremely concerned to leave the family business in good shape for their children and grandchildren, rather than being grateful to pass the problem on to the next generation (take Social Security in most of the developed countries, for instance). Already, you can see an enormous difference in these two areas between the US and Europe, and the Asia/Pacific cultures take it a step further.

http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20030813/APF/308130587Snips:

"...
N.C.'s textile gloom mounts as import quotas set to disappear

By EMERY P. DALESIO
Associated Press Writer

RALEIGH, N.C. --
If you think 2003 has been bad for textile companies - just wait 'til next year.

That's because quotas that currently suppress the number of low-cost imports into this country are scheduled to expire at the end of 2004, meaning even tougher competition for the U.S. textile companies that survive the current shakeout.

The American Textile Manufacturers Institute says some 8,900 U.S. textile jobs were lost in July. That doesn't include the effects of the July 30 bankruptcy declaration by Pillowtex, the 106-year-old Kannapolis textile maker.

The Pillowtex liquidation could mean the eventual loss of some 7,600 jobs, 4,800 of them in North Carolina.

Just since April, the trade group said, the U.S. has bled 26,000 jobs in textiles and 21,000 jobs in apparel.

....

ATMI, the textile industry group, predicts the quotas' end will only accelerate China's growing market dominance. The group predicts that 630,000 jobs in textiles, apparel and related industries could be lost by 2006. (Currently, 745,000 Americans work in textiles or apparel.)

"The result will be the collapse of the U.S. textile and apparel industry," ATMI said in a report last month.

The effects could begin to be felt as early as next spring, as orders for U.S. fabric and yarn for clothing to be produced in 2005 drop sharply.

"As orders are moved to China, a massive series of layoffs, mill closures and bankruptcies will ripple through the textile belt throughout the middle of 2004," the report predicted.
..."



Sundeck:

More cheery news for the US economy...looks like the recovery won't come from the textile industry...630,000 jobs gone by 2006...that's only two and a half years away. What are these people going to do? Stitch jumpers from US FRNs to keep warm in winter?

So what is the final limiting situation (for the global economy)if China does not revalue its currency? Let me ramble for a while....

The US dollar "reserve" currency continues to devalue against those currencies that "hold the line". Who will they be? Probably only those which have substantially closed economies, or ones which are not competing for exports to the US or to "US surrogates" like Japan; which might as well have a hard peg to the dollar because its government refuses to let its currency float upwards against the US dollar.

So, given that for many countries it will be a "race to the bottom", what does this say about the Chinese yuan?

It seems to me that one important factor is the price of commodities/raw materials (cotton, coal, iron ore, petroleum etc). Since many of these are priced in US dollars and retain "intrinsic value", their prices in US dollars (or yen, or yuan) should appreciate (witness the 24% increase in the CRB index over the last couple of years coinciding with a comparable fall in the USDX). This means that manufacturing and exporting economies, like Japan and China, that depend greatly upon imports of raw materials to create their exports to the US, must pay higher prices for their raw materials. If manufacturing costs, marketing costs and the retail price in US dollars of the manufactured goods remain constant, then countries like China and Japan would be caught in a price squeeze, where their margins become smaller and smaller over time.

Would it help China to revalue the yuan? While this would make imported raw materials less expensive (tending to widen margins), it would tend to make China's manufactured products more expensive in dollars and thus less competitive internationally. Thus, depending upon the cost structure of a particular manufacture, there may be no direct export effect for China from a revaluation. (There may be indirect benefits though: like Chinese citizens finding it less expensive to travel abroad and the cost of manufactured items at home being less, and imports being more affordable.)

What effect would there be for the US? If the cost saving due to cheaper raw materials allows an item to be manufactured more cheaply in China and this saving allows the item to be offered for export at the same US dollar price (in spite of the currency revaluation), there would be no net change to the US/China trade relationship - the US would pay the same for a particular item as it did before revaluation.

Presumeably the US wants China to revalue the yuan in the belief that this will make US manufactures more competitive at home and abroad; thus tending to correct the balooning US trade deficit. However, this will not necessarily occur across the board, as it would appear to depend upon the magnitude of the revaluation and the cost structure within particular manufacturing sectors.

What if China does not revalue? At first it appears that Chinese manufacturers would be squeezed between increasing costs of raw materials and fixed retail sales price in US dollars. However, there is no reason why the retail price should stay fixed in US dollars. What is important is only that the retail price in dollars remains competitive internationally. In this scenario, the dollar price of manufactures continues to increase to offset the increasing dollar cost of raw materials. China's exports would continue to be purchased abroad funded by ever expanding (inflating) monetary aggregates in the US and Japan and ever widening balance of payments deficits.

You can begin to see why things like "tariffs" and "import quotas" exist and why the pain of "globalisation" might be unbearable for many of the participants.

What of gold? If China revalues the yuan, this effectively corresponds to an increase in wealth of Chinese citizens vis-a-vis the rest of the world. Given that most gold consumption is in jewellery (as opposed to investment), an increase in wealth would presumeably result in an increase in gold consumption in China and eventually an increase in demand-driven price. On the other hand if China does not revalue, then trade deficits will continue to be funded by expanding money supplies (inflation) and a concommittent appreciation in the dollar price of gold as it preserves its intrinsic value.

Either way it would seem that gold will benefit.

A simplistic view of things, perhaps...FWIW

:-)

Hmm...I follow the thread and strings to be pulled; however,
I hit a disconnect when wall street and the banks of brazil are compared. They make their money in fundamentally different ways. Wall street requires the punch bowl to be full in order to forstall the hangover. The punch bowl stopped being refilled by the common means around the beginning of Clinton's second term. Everything brought to bear since then to keep the punch bowl spilling over the edge has been by extraordinary means. Debt shamelessly foisted upon the future generations such that inflation is really the only option to relieve the burden on taxpayers yet to be born. Massive default on bond obligations to international holders (America bankrupt..again...still...no suprises here?) is unthinkable? By whom? Those counting themselves among the quick? Perhaps an opinion should be gleened from those not yet born that will be asked ...hang on a sec while I check in with them....

resounding laughter is all that I can hear.

You dont really have to study a price chart very long to understand that the overall movement of price and time are not random events. the beauty of a price chart can just be as amazing to behold as watching Mother Nature at work on the Discovery Channel. Whenever I get too caught up in the daily tribulations of this world, all I have to do to unstress myself is to watch a program involving the various lifestyles of the wonders of our plantet. After a few minutes you realize that there is more to life than what our leaders would like for you to believe.

Price movements as measured by TA are "controlled" by a higher force at work in our existence. This is very evident especially in the more emotional commodities like the metals. Leonardo Fibonacci as a certified genius in my book. His work with the "golden spiral" and the series of numbers now named after him is just an incredible discovery
leading one to have to conclude that all life as we know it is governed by forces beyond our what our puny brains can comprehend.

The mathematical spirals that control our universe are very very evident in all aspects of life including the price/time movements of stocks/bonds/commodities. Every thing has its own rhythm that guides it in the longer term. The key is finding clues that lead you a better understanding of that rhythm which will lead to better decisions, especially in trading. There are many books you could get to delve much deeper into all of this , but the one that got me started in wondering about the implications of math involved with the financial markets is a book authored by Chris Carolan, titled "The Spiral Calendar".

I am not saying that Fundamental Analysis doesn't have its place in the world of forecasting , but in my book, one must try to grasp what Technical Analysis is all about to become successful.

Sometimes I can't help to think that TA is a self fullfilling prophecy. As it is also used by the antagonists of free markets - if, of course there are any such entities as the ESF, the PTB, the PPT and others ...

At least I know that since Oct. 87 there is the president's official "Working team on financial markets", an entity dubbed Plunge Protection Team (PPT), shortly after coming into existence.

Anyway, don't despair the markets have never been "duped" forever.

... and as we can all see "they", the cabal, the hedonic reporters of B(L)S, or whatever dark force you may envision can't even supress the POG in a meaningful way and for a prolonged time anymore.

POG is like a tightly coiled spring, looking for release any time now.

Hoping you've all "bought the dips" being so generously offered by your favorite supression entity.
Cheers cb2

Thank you for your response.
Taking your analogy and putting a twist on it. Couldn't you say that China is pulling the U.S. into a debt trap similar to what the IMF has done to third world countries?
China continues to buy dollar denominated assets (with the grateful blessing of a US administration that wishes to delay the pain or correction), becoming the US's largest creditor and giving the dollar an artificial float. This huge overvalued dollar deficit becomes a deadly financial boulder that it holds over the US's proverbial head.
At some point, China can drop the rock (unpeg the yuan from the dollar) and yell "Bingo! I win!". If the US doesn't, at that point, have the strength to carry the debt rock, then China becomes the picture of the U.S in the 1940's-50's. The Chinese people become their own best customer and replaces the US as the world's best customer.

Simply
"The customer is always right!"

To me it seems there is something to be said about the
human being's ability to perceive pattern in every thing.

Consider the figure of the triangle in commodity trading.
I am not saying it has no significance. It does have
significance. But not the significance that many people
think that it has.

The human ability to perceive a triangle is greater and
more refined than the ability of trades to create a
perfect one. All that is needed is for trades to start
being confined to a narrowing range. This is a phenomena
which occurs under various circumstances and tends to
follow certain events and precede certain other events. It
is not mysterious or holy, really, but is just something
that happens, like trees putting out branches in certain
places, or plants putting out buds at the tips of stems.
It's an aspect of how it works. Naturally, when trades
become confined to a narrowing range, at some point the
line formed must -at some point- either continue
horizontally, or it must cease narrowing. It is simply
more likely to cease narrowing. Zeus and Athena are not
responsible for this. Also, when it does cease narrowing,
it is simply more likely to extend out of the narrowing
range in the direction in which it was already going.
Certainly men in the pits contribute to this, as do
traders. But aside from those very human behaviors, I
don't agree there is a need to assign a divine aspect to
charting aspects. And, at least for the time being, I
would have a very hard time agreeing that any of our
brains are puny.

Another bloody day in the bond market. So much for Greenscam's credibility. Unfortunately, the ramifications are about to be felt...oh....a few months from now from the fallout.

Nice wake-up call for the PM's though.

"Hmmm...I follow the thread and strings to be pulled; however,
I hit a disconnect when wall street and the banks of brazil are compared. They make their money in fundamentally different ways."

Agree with you in theory, in that in Brazil, unlike the US, the state has almost entirely crowded out the private sector in the credit markets. Banks are thus little more than rentiers speculating in government debt.

I would suggest however, that we are witnessing the progressive Brazilianization of the US, in so far as the state (and its associated military-industrial complex/FreddieMac-FannieMae as quasi-government entities) is becoming the major source of business for the banking system, since only it can create money/credit.

The points I was trying to make are that a) in Brazil, even though the state is the main source of the banking system's business, the banks are quite prepared to assess the risk/reward ratio of 'shorting the government' through the bond and currency markets and if they feel they can get away with it, will pile on enormous trades, b) if there are vast profits to be made, no sense of loyalty to the government/propriety/patriotism, ever gets in the way. I suggest that large elements of the US financial system will do the same as and when they perceive that Bush is going down. This is merely my view, and you are welcome to agree or disagree.

b) Gold Standard - as a long-time user of TA, I have come to the following conclusions:

-Many TA techniques are equivalent, but their inventors have huge egos and are not going to admit that their own indicators do more or less the same thing as someone elses. Hence there are far fewer trees in the forest than may appear to be the case.

-You probably know Keynes' analogy between picking stocks and a beauty contest, in that you don't pick the girl you think is prettiest, or even the girl that you think is likely to win, but the consensus bet on the girl most likely to win. I believe that this is a recursive process and Fib numbers (which are also generated recursively) tell you what the consensus bet is. This is useful, but limited, in that you may be looking at 20 moderately pretty girls from one village and will try and choose between them, but you will never know from your sample that Giselle Bundchen or Laetitia Casta just happen to be in town on the night of the contest. My own approach is a mixed fundamental/TA approach (I.e. I keep an eye on Laetitia and Giselle's diary) but I do know traders who just use Fib numbers and generate 30-50% returns year in year out.

-There is a kind of view that TA is great for short-term trades, but fundamentals take over in the longer term. I have found that this is both true and false, in that Bollinger Bands can be great for intraday trading, but that Fib ratios drop out of long-term charts with the same frequency as short-term charts. You just require nerves of steel of the kind that very few people have to stick to pure technical trading over periods of years simply because most people (myself included) have an unavoidable need to formulate conceptual models of what's going on in the economy and lack the ability to simply trade off the chart and ignore the newsflow.

http://focus.comdirect.co.uk/en/detail/_pages/charts/main.html?sSymbol=ZBU3.CBTDo Phobos (fear) and Deimos (panic) have a grip on the bond market today? How is Greenspan going to maneover out of this one?

Et moi? Riding the Golden Wave (with a Silver lining)...

-Another point is that a lot of big traders will try and dress up asset prices to give deliberately misleading TA signals. It helps enormously to know TA because you can then see what their game is.

Socrates964 (08/13/03; 09:49:18MT - usagold.com msg#: 107097)
===
NOW you tell me !
Here I have been calculating my Fibs and drawing lines all over the charts, AND you are out GIRL WATCHING !
BOO !! You call yourself a member of TA ?
<;-)

Well, friend Gold Standard, I would not say it's NOT worth learning. A lot of people set great store by T.A., and learning about what some people think is important, gives you some additional wisdom. I think T.A. people do affect the market.

Is T.A. the way to wealth? If I had some knowledge whose use was the SURE key to great wealth, I would not be trying to make a living by selling T.A. methods. Elementary.

In Ancient Times, back in 1981, my son was a graduate Albino Bat with a recent M.A. in Business or whatever, and we devised a plan to carry out Harry Schultz's recommendations out to the letter, with a modest amount of capital.

All we did was rack up losses! Recomendations sounded great on paper, but did not pan out. That's the FACT.

Don't try to get smart on speculating with gold. It CAN be done, of course, but as the saying goes: "A trader who dies rich, has died before his time."

Buy and hold. The ONLY sure course because the ONLY thing we KNOW, is paper tends always to attain zero value.

Guano from the GAB

THAT SPOT AND SPIKE are out and GOING WILD !
Jump SPOT, JUMP !
<;-)

Gandalf - merely a metaphor. From what I hear, a night in calculating Fibs is far more entertaining than a night out with Giselle.

Big support broken in bonds - must be the incipient turnaround in the economy driven by the surge in consumer spending (which is in turn driven by rising oil prices.....) Looks like we're going to test 101.

As you say, it could be a trap, or, as has been reported here this week, just a means of fending of pressure to revalue the yuan.
It reminds me a bit of those nature programs when you see the wasp caught in the spider's web. It's only when the spider gets to the wasp that you realize that that is exactly what the wasp wanted - it was hunting the spider, not the other way around ! We shall see ......

http://www.usagold.com/gold-coins.html

Given 1) Wall Street's firm belief in an imminent strong GDP recovery and 2) a basic investment return of 3% on Treasuries in the absence of price inflation and 3) an inevitable rise in price inflation in the years ahead, it doesn't seem unreasonable to consider the possibility of a 5% yield on the 5-year T-note, 6% on the 10-year note and 7% on the long bond.

http://biz.yahoo.com/rf/030813/markets_fed_openmarket_1.htmlSee url for more, follow link.

R.

IMVHO, this is just another tool which tries to get us in step with the trend--long or short term. And, if it is a poor system for you--remember that a poor system beats no system at all. The lines and numbers can be used to enforce a discipline--and even poor discipline is better than no discipline at all.

Point and figure charts are the most simple and direct. They are helpful in determining the trend and movements within that trend. Also when the trend is broken.

You may be as complicated as you wish--there are lines and numbers and graphs enough to confuse anyone. Use them, in part, or in toto, as serves one best. It is a bit like predicting the weather with the lines and graphs--sometimes it works and sometimes it just rains anyway. (or dosent)

Let's hear it for the golden uptrend!

Cheers!!

BUONGIORNO!

Alas, such reveries are simply such, for old Albino Bats. Young m�dchen als die Bundchen do not cavort with Albino Bats.

However, and to get back on topic, Gold has erotic qualities, this is something that history has demonstrated over and over.

Gold is sexy! Why doesn't the WGC push that?

The GAB

http://www.usagold.com/centralbank/current.htmlCan you guess which prominent central banker recently said this in defense of his nation's monetary steerage?

"The incomes, the purchasing power of our employees, our workers, our people are, by far, more important than what it is we produce... The major focus of monetary policy is to create an environment in this country which enables capital investment and innovation to advance."

A hint. He gets paid an annual salary of $170,000.

Visit the url above to learn the answer, and to find out how a central banker might typically spend some of his income while on holiday.

R.

http://www.usagold.com/wgc.htmlWill this dollar/euro chart (shown in the top week of this report -- August) break out of its wedge like the dollar/gold chart previously did, which can be seen if you scroll down to the week of July 25th.

If the dollar is to get weaker, (and the market's opinion of its bonds is not painting an encouraging picture), then you will want to limit your exposure to losses in purchasing power as the dollar falls. Call Centennial to diversify your portfolio with gold.

R.

http://www.hurriyetim.com.tr/haber/0,'sid~381@nvid~301182,00.asp"President Ahmet Necdet Sezer did not oppose the view of the government and General Staff, that agreed on the issue of sending troops to Iraq. " ...

The London Bullion Market Association (LBMA) has reported its summary of July clearing statistics.Ounces transferred fell 14% from the previous month to a new low. Average daily clearing at 15.8 million ounces is now down 21% year-on-year.

I continue to take this as a very good sign, that physical gold is slowly but surely becoming less marginalized as a mere token of massive derivatized banking and financial accounting maneuvers, and is coming more into its own as solid wealth -- more like unassailable property and less like an intangible defaultable contract.

R.

WHEN you finish and get home you will see that ---
The SILVER ROCKET just took off again today !
<;-)

Speaking of the Total Reserves of $44.5 billion reported by the Fed last Thursday for the two weeks ended 8/6/03, a very funny guru on a very erudite website continues to hold the mistaken belief that those reserves apply against the commercial banks' ASSETS, instead of applying against certain deposit accounts that are bank LIABILITIES. But, hey, nobody's perfect.

Yes sir, poured and finished a two car garage today and I was happy to see silver has taken back yesterdays loss. The low yesterday was 484 so I guess we've seen at least one retest of that old 480-485 so-called "breakout" level. I'll agree with Leonard Kaplan (aka uptick) that I don't know which way silver is going (short term), but the days of very small moves may be gone for a while. Imho the future is going to prove that $5.00/ounce silver is cheap but short term trading is most difficult. Gold is easier, just buy whenever the price approaches the 200 day moving average, whether physical, paper or both.

Does the wizard have a X and O chart with green Xs on it for silver?
Thanks
Rich

http://focus.comdirect.co.uk/en/detail/_pages/charts/main.html?sSymbol=ZBU3.CBTBLOODY Day in the Bond Pits !
Look out US$ !
CAN everyone say CRASHING DERIVTIVES ?
<;-(

http://stockcharts.com/def/servlet/SC.pnf?chart=$SILVER,PWTA[PA][DB][F!3!!]⪯f=GBUT, it does show an "UP TREND" !
WHY, such a difference you ask ?
BECAUSE of the difference in prices between the two.
$360. charts far different that $5.
<;-)

http://www.business-standard.com/today/story.asp?Menu=23&story=20766(Chennai, August 14, 2003) -- The Reserve Bank of India (RBI), is expected to allow banks to launch gold-linked deposit schemes that will help them hedge gold price related risks through commodity exchanges.

The move will allow banks to dabble in the commodities trade as current banking regulations do not allow commercial banks to trade directly in commodities. RBI approval for the scheme is expected in the next eight weeks.

It is also understood that an active dialogue has been initiated between the RBI and the Forward Markets Commission (FMC) on whether gold should be treated as a commodity or a currency equivalent.

P H Ravikumar, managing director and CEO, National Commodity and Derivative Exchange Ltd, said,"These gold-linked deposit schemes would operate similar to recurring deposits. Banks would be floating gold-backed deposit schemes where depositors would will be paying a nominal sum every month and would receive gold at the maturity of the deposit." [In theory.]

"Banks cannot cover the gold price related risks for each of these schemes on an individual basis. Hence they would pool all these deposits and cover their risks using the commodities exchange."

-----(see url for article)-----

If this bird gets off the ground, does anybody else see it coming ultimately to a bad landing? The games remain the same, only the geography and the names have changed.

Contracts and all things represented or promised by paper have admin risk and do not typically stand the test of a crisis -- even small ones. It will be interesting to see if the RBI allows this additional element of systemic risk to be wilfully introduced into the banking system, and is it prepared to act as a gold lender of last resort if needs be? To the last ounce? And what then?

R.

Books have been written about whether markets move randomly or with some "predetermination" or predictable turning points. Human nature (imho) attempts to find or discern some order or pattern in any constantly varying sequence. Given a chart of any past price movements even a child unfamilar with what the chart represents will try to envision where the line "should" go next. Technical analysis is the general name for any one or combination of many such systems that believe past performance may reveal the future.

The actual price movement is a reflection of the buying and selling in the market. This seems obvious but the price reflects NO more than this investor sentiment. The fundamentals or technical analysis may be screaming that the price should be moving another way but only investor buying and selling determines the movement. The bubble tech stocks of the 1990's certainly were an example of this. In this sense, the market is never wrong, in that it always correctly shows sentiment. The question should be, how often is investor sentiment correct. Some do okay merely trading contrary to the prevailing momentum.

TA attempts to predict this sentiment. As was stated earlier, if enough traders believe that the price will react at certain levels or otherwise be predictable by technical indicators AND if enough of those traders then place their bets accordingly, voila! So, we have a self-fulfilling prophesy but, whether the prediction created (caused) the result or whether the prediction was clarvoyant, the result is the same. So, does TA work?

What constitutes TA or fundamental analysis is not always clear. Should the COT (commitment of traders) numbers be classified as technical or fundamental? Myself, I use both, as I believe many do but many more use only technical analysis with many technical traders refusing to even consider fundamental information as they believe it may bias their technical readings! If the goal is to "trade" the markets for profit, then whatever gets the results is paramount. Although I believe the fundamentals of silver will determine a much higher price at some future time, the POS has been trading on technical considerations for years. Many analysts, confused that the POS does not rise, given the fundamentals, have determined that the market is overtly manipulated. I don't believe so, it is merely trading technically with the majority of traders totally oblivios to any ongoing supply/demand deficits. Has POS now entered a new higher trading range? If so, has this somehow been caused by the underlying forces of supply and demand? Or, are we merely trading in the range outlined by a longer timeframe? Supply and demand are the most basic of fundamental analysis and (without a doubt, imho) the stronger of the two even if less often the driving determinant of price movement. But, with what we know of how most things in this world function, why should the markets be rational?
Rich

http://story.news.yahoo.com/news?tmpl=story&cid=808&e=6&u/dowjones/20030813/bs_dowjones/2003081301Excerpt:
"Foreign economists predict that in order to deal with the inflation pressures generated by foreign currency inflows, the government is most likely to loosen its strict policies on foreign currency purchases by Chinese or allow the Yuan to float upward."
As China chooses the latter option, she will be compelled by necessities beyond cooling inflation and beyond her borders. Among others, the need to equalize and harmonize Asian and global wage, price and currency pressures, retain acceptable export market share, retain and attract foreign investment and assure suitable cooperation in foreign policy in Korea, Taiwan, etc.

While some systems work under certain conditions (such as in a bear market but not a bull or vice-verse) and some work under other conditions and some seem to work but may be correct only by chance, there is, of course, only one always correct, never failing system. This prediction mechanism quarantees unbelieveable results but is not for the faint of stomach as it does involve the sacrifice of a live, plump, Rhode Island Red chicken. The ceremony must be performed at exactly midnight under the dark of a new moon.

For further and complete (to date) instructions on reading the entrails for always accurate market predictions, it is necessary to forward one ten ounce gold bar or 1000 silver eagle coins to

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I respond quickly with the following paragraph:

Thank you for your proposal. It comes at an interesting time. The worldwide banking system is about to collapse. All those holding dollar deposits will lose everything. Do not be fooled by the bankers, they will steal everything! You must convert everything into gold as fast as you can. Please ship the gold to me, and then I can help you divide it for your benefit. I am only too eager to help you in your
distress.

-- (name withheld)

Please feel free to copy my paragraph and use it when the opportunity arises!

Rich, i'll sign up only if you promise I can have the gizzards, after the readings!

http://biz.yahoo.com/rf/030813/markets_bonds_5.htmlNEW YORK, Aug 13 (Reuters) -

...traders suspect the market faces a no-win situation.

"If you think the Fed will revert to type and hike when growth picks up, then that's bad for bonds," exclaimed one dealer. "But if you take them at their word: that they're going to keep policy super-stimulative until they get growth and inflation, then that's bad for bonds as well."

Inflation is corrosive for Treasuries since it eats into the fixed-rate return they pay. Anticipating this, investors are dumping longer-term debt so the gap between two- and 10-year yields has blown out to a record 276 basis points from 258 basis points at the start of the week.

----(see url for article)----

Gold, on the other hand, is not in a similar no-win situation.

Rising yields further take a toll on equities as businesses find financing future growth more difficult, and ulitimately gambling on inflation to make the cashflow work out in the end.

When it comes to protecting your wealth, gold is the right tool for the right job.

R.

Reaching the breaking point.

We always ran a trade deficit in the 90's but our government deficit was being reduced since 94 which helped
keep interest rates down. WE temporarily even managed to run a operation surplus and bought back 30year bonds. Now with the recession, the government is running a huge budget deficit which requires
frequent foray's into the bond market to raise fresh cash. Consumers need constant fresh injections of cash from
refi's and home purchases and credit cards. Business need injections to support flagging pension funds. In the next year we will need 1-2 trillion dollars to
finance it all, 4 trillion in the next 2 years. Long term with social security the treasury estimated 41 trillion.

Where is this going to come from? There is a cool 10 trillion in
stock market value that is going to be sucked out of stocks into the bond markets. They'll both fall together.

Wealth suction.

http://www.usagold.com/DailyQuotes.htmlSnip:
"Gold regained it composure after getting trampled by Fund and speculator selling yesterday prior to the Federal Reserve interest rate decision and economic bias statement. The selling continued overnight into the Asian and European trading sessions but cooler heads ultimately prevailed and both gold and silver rebounded nicely by mid-session in New York. Some analysts even suggested that silver surged and dragged gold along for the ride. It is possible that the sell off in gold and silver was well overdone given that the FOMC statement was far from optimistic about U.S. economic recovery once the statement was translated from "Fed Speak". The FOMC is apparently very concerned about the threat of deflation. Regardless, the knee jerk reaction was a strengthening in the U.S. dollar along with Japanese currency market intervention and that accelerated the push to sell gold. While some Funds and speculators reaped quick profits it appeared that some weak hands lost their resolve, panicked and bailed out only to see gold and silver rebound in today's trading session on weakening dollar and a tanking bond market leaving precious metals as the "safe haven" investment choice."

Waverider: Good to see the DMR as excellent as ever!

Goldguest, in honor of being our first subscriber, gizzards it is! The phonelines are ringing! Remember, our subscriber list IS limited so ACT NOW! There are only 99,999,999 memberships left! And as a special reward for the next 100 callers only, a free paring knife, complete with special chicken blood cleaning clothes, FREE.

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From Black Blades' Daily Report.....

"Some analysts even suggested that silver surged and dragged gold along for the ride."

My thoughts: Imagine the outlandishness of such thoughts! Silver leading gold? Preposterous. (:>) What next? Will someone try to tell us that the price of silver is somehow connected to traders from the soybean pits?

Mars is approaching a once in our lifetimes closeness in distance from the earth. What will this event portend for the POG and the POS? Is this technical or fundamental analysis? Oh, yes, there are newsletters available that predict market prices based on astrology. Mahandra is not the only one. This is, of course, a mute point as we know that there is only one foolproof prediction system.
Rich

if i was a trader id move to china.
id trade physical gold and physical silver.
id play the ratio game bewtween the two. playing one off the other all day long opps i mena the half day the part time paper pushing gold slackers over at comics work.
but i think the silver gold ratio bumps its head at 74 and is afraid to go below 63.5 64 for the time being. i no longer really care about silver price im more concernd about ratios and when the silver gold ratio is around its historical norm ill cash my silver in for gold .

Hi Rick, somehow I thought that part would get your attention while writing it. I see that I am not disappointed. ;-)

A nice pop of 17 cents during the session. It has been rumored that "deep-pockets" have been accumulating gold and silver (physical). We know about Soros and Buffett (who today agreed to be an economic advisor to Schwarzenegger for Gov.). Maybe they reentered, increased positions or maybe others have joined the party. We know about Bill Gates interest in silver but not sure if that extends to the physical metal or not. There is another billionaire who has been in the market but the name escapes me now. The price of both silver and gold remain a bargain and should the dollar keep trending lower (a very likley outcome) then those of us positioned in the precious metals should fare well.

- Black Blade

off to the gym!

http://news.bbc.co.uk/2/hi/business/3149305.stmYou could do worse than having the Sage of Omaha, the venerable Warren Buffet as your economic advisor.

The Terminator seems to start off on the right track.

If I could, I'd probably would vote for the big boy!

... and still buy more gold than silver - a question of weight and value ... Austrian's R'US - cb2

I'll be back! ... hasta la vista, baby and now, it's Ektschon... clean up the Gray to Black & ... White and drink your Scotch like Schnaps - and we'll wok fo da people of Kalifornia, aka stable of Augias... fo the next li'l ole while anyhoo.

Wow, I'd rather have the real Austrian economists back and you'd never ever think of electing a terminator ... anywhere!

http://www.lbma.org.uk/clearing_press.htmExcerpt:
"Gold and silver clearing statistics parted ways sharply in July. Measures in gold declined while silver rose to the highest levels since February 2002. Gold ounces transferred fell 14% from a daily average of 15.8 million ounces to 13.6 million ounces, setting a new low."

http://stockcharts.com/def/servlet/SharpChartv05.ServletDriver?chart=$silver,plua[pa][da][f!3!0.03!]&pnf=y Gandalf, here's one with green Xes.

A post earlier in the day (Towncrier #107119) referred to the prospective moves by the Reserve Bank of India to allow the banks in India to open gold-deposit accounts, plus do some other things which they have not been allowed to do up till now.

This sounds quite sinister to me.

India is the world's largest purchaser of gold, and owns the world's largest stock of gold, too.

The banks want to issue paper gold, they want to facilitate "hedging against the changes in the price of gold", all this stinks of another "COMEX" and "LBMA" over again. Maybe the powers that be think they have to move in where the stuff is hottest, to control it right there.

Wean the Indians off of physical (could it be done?) and get them to take paper gold, instead. Then, manipulate the paper gold to keep it DOWN. If the Indians are the largest buyers, makes sense to get them under control ASAP.

This is the same old snake, rearing its hideous head on the other side of the world. "You can't control gold in one part of the world, you have to control it ALL over the world".

Let's hope the Indians don't watch too much T.V. and forget their Indian ways, and that this scheme flops.

AS I believe Waverider said, "Just because you're paranoid doesn't mean there isn't anyone out to get you."

GAB

There's been some curious pieces of the silver puzzle coming together. There's a ridiculously high commercial dealer short position that's been recently increased significantly; and of late, the market price has been see-sawing (8/12, down 13�, 8/13, up 17�). The circumstances make it difficult to deny the likelihood of market manipulation.
My take on all this is that the commercials are increasing their short positions to drive the price down, to produce the perception of silver as a losing investment, with the hope of having investors dump metal on the market. But, I believe the silver holders aren't buying the scheme. Instead, when the price drops precipitously while the short positions increase, there's actually more buying of the actual metal. In other words, the silver price drops are being driven by the paper market, while the price increases are caused by demand for physical. If this theory is accurate, these dealers are only preparing their own demise. Also, given the recent bond market debacle, I wouldn't be surprised if indeed some "deep-pockets" have been accumulating gold and silver (physical).

http://stockcharts.com/def/servlet/SharpChartv05.ServletDriver?chart=$silver,plua[pa][da][f!3!0.03!]&pnf=yI only get a headache from trying to read the VARIBLE Price Scale of each little box.
LOOKS nice though !
The "Low Pole Reversal" ALERT is encouraging !
"LEAD" the way for GOLD, Silver !!
Hi Ho Silver !!!
<;-)

http://stockcharts.com/def/servlet/SC.pnf?chart=$GOLD,PLTB[PA][DA][F!3!!]⪯f=GNOW we are ready for the BREAKOUT !!
The next X will be the key for a "TO THE MOON, Alice" UP Trend extention.
Tick Tock !
Are you ready ?
Perhaps you should "topoff" your insurance stash !
The Hobbits have ten new "Clinks" today.
THANKS USAGOLD !
<;-)

http://www.business-standard.com/today/story.asp?Menu=23&story=20766
You ask: "If this bird gets off the ground, does anybody else see it coming ultimately to a bad landing?"

As I was reading this article, my first impression was that it is a scam similar to the American states being persuaded in the 1990s to 'invest' their pension funds in stocks. I expect that those pension fund 'investing' decisions most likely tended to be made by bureaucratic fuddyduds who had no previous experience in stocks, with only a child's knoweldge about them.

My second impression was when you compared the idea to a bird. The mental image that I got was of a large flock of unfortunate, dumb, featherless creatures, all getting together to affix feathers onto their arms with beeswax, and that they were then going to go fly toward the sun. Of course if you are a feather collector like I am, that's interesting news. Unfortunately, most people are not.

(no link)MK - If this passes, you could offer a class in the benefits of owning gold and stress reduction.

From today's Palm Beach Post and the Associated Press

snips

DENVER. Voters will get to decide this November whether the city should do more to reduce stress.
....................
City council members said Monday they were forced to put the question on November's ballot because resident Jeff Peckman collected 2,462 certified signatures, slightly more than the required number.
---------------
.....Councilman Charlie Brown.......called the proposal "liunatic."
...................
The measure doesn't advise how the city should reduce stress but requires the city to research the idea and scientifically prove which mehtods work.
...................
Some of Peckman's ideas include playing soothng music in public places and improving the quality of school lunches.
....................

ME: MK, I think you are being invaded by some Californians.

Sorry, typos are mine, not the Post's.

http://quotes.ino.com/chart/?s=FOREX_XAUUSDO&v=s&w=1&t=l&a=12Battle for price of gold going on at this very moment. Huge 10 point blows being tossed about the ring. So far....someone is matching the 10 dollar spike down moves. This is some show of power/desperation??? Amazing action tonight. Think maybe someone is in just a little bind this evening?? I expect a video clip of this fight to pop up on my screen. Maybe Tyson biting off a piece of ear lobe from the gold short person. Sick em boyz!!

Operative (08/13/03; 21:04:37MT - usagold.com msg#: 107143)
===
Such volatility is not showing on three other boards !
<;-)

http://quotes.ino.com/chart/?s=FOREX_XAUUSDO&v=s&w=5&t=c&a=12
If someone would like to shoot my bucket full of holes on this, I would be very grateful. But I have come to associate the pattern -shown at the link- as having something to do with a divestiture of positions of some sort. I don't know a lot, but it seems to me that the only people who would want to trade in ways that result in this pattern are those who are wanting to get out of short positions. Again, I don't know my elbow from a bump on the ground, where this is concerned, but who would consistently offer long contracts for sale at ten points below the going price, typically when the American markets are closed? No one, I figure, at least not repeatedly. Yet it seems to make sense that if someone held numerous short contracts, in a circumstance that promised to make them all losers, that person or entity might be willing to cover those contracts -perhaps involving a surreptitious gentlemen's agreement- at those prices to get out of them. I don't know if this is true. I might be way off. I don't even know enough to know whether I am way off on this or not. But it seems to me that in the past when this has happened, it has tended to be followed by at first a strengthening, and then by a significant move upward over subsequent days or weeks.

I have to admit that I have been interested enough to pay attention to the Peoples Republik of Kalifornia recall initiative and possible election of Arnold Schwarzenegger to the office of governor. I do find it rather amusing that those opposing the recall refer to Schwarzenegger's having no experience in political office. In my book that's a big plus. I would go as far as to say that one of the major problems we face in the United States is the "career politician". The career politician is essentially a power hungry sociopath feeding at the public trough and stealing from the public to squander on pet projects and repay political favors with favorable legislation and lucrative contracts.

Last night I read a comment from Schwarzenegger's friend and former Minnesota governor Jesse Ventura. It was an open advert that offering advice saying that agents and media moguls are nothing as he is about to face the real predators. You may recall that he and Schwarzenegger co-starred in the movie "Predator". I am certain that if elected he will be under a lot of pressure to "play along" as politicians tend to do.

I think that having Warren Buffett on his team is a brilliant move as the focus of the state's problems leading to the recall is the budget deficit crisis to the tune of $38 billion, as well as the reregulation of the energy market that was much worse than the original regulated market. Kalifornia is a "business unfriendly" state and many companies are leaving for more business friendly regions. When the state was flush with cash and had strong revenues during the tech boom the state did not set aside funds for the inevitable economic downturn. Instead they squandered the funds and spent like drunken sailors on shore leave in Bangkok.

Can Warren Buffett help fix this mess? I doubt it as I think the state is a lost cause, but Buffett is perhaps the most qualified and he has the credentials. When Lehman Brothers was embroiled in the big bond scandal a few years ago and top executives were forced out, Buffett was called in to take over as CEO and restore honesty and integrity to the firm (such as it is). Still it is interesting that liberal Republican Schwarzenegger is teaming up with moderate Democrat Buffett. That alone is a shrewd move that may attract voter interest. What has been overlooked or at least not received a lot of media attention is that Steve Forbes is also on the new Schwarzenegger team.

Whatever happens, it should prove to be an interesting election. After all almost anyone is an improvement over career politician "Red" Davis (I hate to say it but even smut king Larry Flint is better). As I said, in my opinion inexperience in politics is a very big plus. Lets face it, the "founding fathers" most of whom were also immigrants had no real political experience either and I'd say they did a fairly good job. ;-)


- Black Blade

http://www.forex-markets.com/quotes.htmAnother link for live gold prices. But your probably right ole Wizard, this is almost too much of a move.

http://www.financialsense.com/Market/wrapup.htm
Snippit:

It looks like the silver market is firming up by moving into stronger hands. Even yesterday when silver was down by 3% the silver mining stocks were only down by two or three percent. In the past when silver took a big hit in the 3% range, the stocks would fall by around 8-10%. We didn't see massive liquidation in the shares. Most of the players looking at the daily silver chart were just waiting for the gap at $4.80 to fill before the bounce right back to $5.00.

Gold has been in a major consolidation pattern since the intra-day high of 388.90 was hit on February 5th of this year. With all of the stress in the currency market and the tremendous selling pressure on bonds, the situation is ripe for an explosion in the gold price. The governments around the globe continue to increase the quantity of fiat currency in circulation while mine production for gold declines. This is a time bomb waiting to happen. It would only take a few disgruntled bond players with an attitude to take their bond money to the precious metals pits and blow gold and silver wide open.


Black Blade: I think it quite possible. Bonds got thoroughly trashed today and all those players that bought in the Treasury auction last week got be kicking themselves pretty hard right about now. The big boys (investment houses and brokerage firms) bought in to sell piecemeal on the secondary market. As I expected they are looking at some hefty losses and probably bigger losses to come. Bond demand just isn't there and as Hartman covers in the Wrap Up, Fannie Mae and Freddie Mac added supply by selling Treasuries to cover derivatives positions (oops!!! � Can you say LTCM?). Last week I said that I would be watching the secondary market in bonds � and sho nuff! Bonds aren't exactly the "safe haven" they were touted to be. Then there are the international players who just took a big hit by buying Treasuries to add to reserves � most notably Japan. The Japanese just can't catch a break it seems. They squander over a couple trillion Yen so far this year to prop up the US dollar for their export driven economy and the Japanese currency traders knowing the game of "currency market intervention" are playing their government very nicely at the expense of the Japanese taxpayer. Meanwhile the Japanese authorities have a ton of paper that's devaluing at a nice clip. How much longer can they keep it up? That's a question many are asking. Meanwhile gold and silver is the place to be because the dollar can't compete with this bond market in collapse added to soaring budget, trade, and current account deficits that keep piling up with no end in sight. At least if the persistent rumors are true, then some Asian central banks are positioning themselves by accumulating gold in their reserves but I think it may be a case of too little too late. I am just glad I have my "insurance" safely tucked away and I can't sleep soundly at night.

http://money.cnn.com/2003/08/13/commentary/bidask/bidask/index.htm
Dig down into earnings, and things don't seem quite so rosy.

Snippit:

But Merrill economist Ron Wexler took a harder look at earnings and they didn't seem nearly as good. First off, Wexler pointed out that much of the surge in earnings came from financial companies, a big S&P component that saw profits grow by a whopping 24.6 percent. The financials blew past analyst estimates thanks, in large part, to the low interest rates that prevailed through the second quarter and the surge in mortgage activity that ensued. With rates up and mortgage activity having fallen to a one-year low, nobody expects a repeat performance. The banks need traditional consumer and business loan activity to pick up now. At this early stage of economic recovery, that hasn't really happened yet. Take away those bank earnings and what do you get? Not much -- earnings through Thursday were up by just 1.1 percent over a year ago. Taking it a step further, Wexler looked through all the income statements, balance sheets and cash flow statements for S&P 500 constituents and found that non-operational line items -- that is, revenues and costs not associated with the production of goods and services -- played a big role in driving profits. Cash flows from operations are only up 2.8 percent since the fourth quarter of 2001.


Black Blade: It is actually worse than that. Earnings are coming on cost-cutting � that is firing workers for example. Then there is today's inventory report showing a build in inventories as productivity gains. That means companies are not selling goods fast enough or are producing goods at a pace that could lead to more �.. yep, you guessed it � more cost-cutting. This alleged "economic recovery" is rather pathetic. Remember it is also called a "jobless" recovery. While the dollar is still grossly overvalued companies are also facing harsh competition from imports as well. There is a long list of reasons why the "economic recovery" spin just doesn't add up. Unfortunately much of the earnings picture is clouded with questionable accounting tricks and not based on solid hardcore money in the bank earnings. But that's a another discussion for another time.

My wife and I went to the mall for the usual window shopping. She called my attention to a well known seasonal mechandice store. There it was, CHRISTMAS in AUGUST.
No Halloween. No Thanksgiving. A full court press into Christmas. Makes you wonder.
I believe last year it started in September.
Slingshot----------------<>

http://www.msnbc.com/news/951993.asp?0sl=-12
Business climate seen oppressive amid state budget mess

Snippit:

Aug. 13 � California's weather may be the envy of the nation, but the climate for business here is lousy by most accounts, and the forecast is that conditions are likely to worsen here before they get better. In a recent survey, one out of five California business leaders said they plan to expand or move their companies outside the state because of high costs and excessive regulation. "There's a lot of forces in the state that seems to feel compelled to burden business with more and more cost and that's very unfortunate," said Bruce Karatz, chairman and CEO of homebuilder KB Home. California companies point to three laws passed by the California state legislature last year as "job killers:" The nation's only employer-paid family leave act; a measure raising unemployment insurance and another boosting worker's compensation benefits. Add to this list more than $65 billion in higher taxes and fees and the total is more than many companies can bear. At the same time, California companies are being poached by states like Texas, Nevada, Colorado and Idaho � lured by tax breaks and other financial incentives.

Black Blade: And so it goes.

After reading that this specialized form of TA can be done only on a full moon. I went out on my patio to find the moon in full bloom and Mars to is right. I ran back inside and with the help of the Yellow Pages called "Chickens R Us". A friendly voice answered my call, "Chickens R Us", May I help you? Can you send me a Rhode Island Red, pronto' I asked. Sorry we are out of them. Would a chicken from New Jersey do?. No, it has to be a Rhode Island Red. There seems to be a great interest in that type of fowl, may I enquire the importance of the bird?, she asked. Whats your name ? Silvia, she replied. Well, Silvia I have to sacrifice this type of bird on a full moon on an alter wearing a monks outfit to tell which way the price of gold will go. Really, she said. Yepper and I cook the Gizzard and if it is tough , gold goes lower. If its tasty and soft, gold goes higher, You don't say'said Silvia. Buy the way what is your name 'sir.
Click!
Slingshot------------------<>

Thinking it over. Click should be replaced with Greenspan.
;0)
Slingshot-----------<>

http://money.inq7.net/breakingnews/view_breakingnews.php?yyyy=2003&mon=08ⅆ=14&file=15SNIPS:
...
The Court of Appeals ha[s] suspended [Philippine central bank governor Rafael] Buenaventura and other central bank officials for one year in a case involving the closure of a bank.
...
In a statement, the central bank said the officials would continue to serve in their offices, since the decision was not yet final and executory. Officials said in a briefing that the central bank would file for a motion for reconsideration and pursue all legal remedies.
...

Gold up about two dollars with the dollar index ALSO up about a half cent. Gold is rising relative to nearly all currencies.

GOLD train coming up!

http://www.usagold.com/gold-coins.html

Save your "strength" -- call us today!

http://www.business-standard.com/today/story.asp?Menu=23&story=20766The WGC in today's brief said:
----------
"The Reserve Bank of India is looking at ways of allowing banks to hedge gold price risk via commodity exchanges. As outlined in our recent note on Indian deregulation there are now four national level-multi commodity exchanges in India and trading in gold is expected to start within the next few months. There are independent proposals to allow banks to offer gold-backed schemes to their clients, whereby the client would deposit funds and receive gold at the maturity of the deposit period (not unlike Gold Accumulation Plans); some banks are believed to be in discussion with the RBI with a view to hedging the gold-related price risk through commodity exchanges and it is hoped that clearance may be received by December."
------------

Thank you, GAB, for voicing your echo of support to my (msg#107119) skeptical comments yesterday regarding this affair and any such moves to marginalize physical gold through its paperization within the banking systems of the world.

For more background, here are some excerpts from the "recent note on Indian deregulation" that the World Gold Council has referred to above.

BEGIN EXCERPTS
(www.gold.org)
Gold has played a pivotal role in the Indian social fabric for as far back as man's memory will stretch. Gold was acquired in India in Roman times as part of the silk and spice trade...

Estimates vary, but it is believed that at least 13,000t of gold rest in India -- or approximately nine per cent of the world's cumulative mine production. The hoarding tendency is well ingrained in Indian society, not least because inheritance laws in the middle of the twentieth century lent a great desirability to anonymity. Indian people are renowned for saving for the future and the financial savings ratio is strong, with a ratio of financial assets-to-GDP of 93%.

Gold is valued in India as a savings and investment vehicle and is the second preferred investment behind bank deposits. India is the world's largest consumer of gold in jewellery (much of which is purchased as investment). Gold's circulates within the system and roughly 30% of gold jewellery fabrication is from recycled pieces.

India is typically also the largest purchaser of coins and bars for investment (>80tpa), although last year it had to concede first place to Japan in the wake of the heavy buying in the first quarter due to fears for the stability of the Japanese banking system.

In 1998-2001 inclusive, annual Indian demand for gold in jewellery exceeded 600 tonnes ... Typically, India accounts for 20% of global gold offtake in any one year.

It was not always thus. As recently as 1991, Indian gold demand was a little over 230 tonnes, or only 8% of world offtake. The deregulation of the market during the 1990s brought about a dramatic change. Jewellery demand increased from 208t in 1991 to peak at 658t in 1998, while demand for investment bars grew from ten tonnes in 1991 to 116t in 1998, and registered 85t in 2002.

The World Gold Council, which was involved in the deregulation of the market in the 1990s, continues to work closely with Indian gold market stakeholders to foster increased demand, partly through the development of new gold instruments that can be bought through banks, as an additional set of distribution channels, although the rural community does still tend to prefer to use jewellers.

The Gold (Control) Act, implemented in 1968 and abolished in 1990, had forbidden the holding of gold in bar form. The repeal of the Act was part of the economic reform process that took place in the wake of the balance of payments crisis of 1990 and 1991.

[Now brace yourself for the coming attempts at paperization...]

The second phase, the development of gold-related financial instruments, is rapidly coming to life.

The one blot is perhaps the poor performance of the Gold Deposit scheme, which was launched in October 1999. Under the scheme the State Bank of India takes local gold deposits and issues interest-bearing gold term deposits in return (and allow local banks to lease the metal to jewellers). This has however gathered little momentum as members of the public continue to show a preference for holding their gold in physical form rather than a paper representation.

Roughly eight tonnes have so far been mobilised; the bank had been looking for 100t in the first twelve months of the scheme.

Gold in any physical form can be tendered and is subject initially to a non-invasive assay (no effect on the piece in question). At that stage, if the tenderer does not agree with the assay results or wishes to withdraw for any reason then he may do so. If the deposit is made, then the metal is melted and subjected to full assay, which would reduce the metal to scrap form.

The lock in period has also deterred would be investors. The terms available offer interest rates over a range of lock-in periods from three to seven years, although there was also an initial lock-in period of one year, after which premature encashment would be permitted.

The slow uptake of the scheme has meant that leasing to jewellers remains comparatively limited. The State Bank of India (SBI) cut the rates payable on these deposits in April, from 3-4% to 1.5% because of the low interest rates prevailing in the international gold market, which further suggests that uptake is likely to remain sluggish.

Futures trading is on its way--
At present, banks may trade forward in gold locally or internationally, for the purposes of managing price-risk, but as yet they are not permitted to trade forward with other non-bank counter-parties.

In February 2003, however, the Cabinet Committee on Economic affairs approved futures trading in 54 commodities, of which gold is one and this could presage a major increase in gold-market activity. The National Commodities and Derivatives Exchange in India (NCDEX), led by a joint venture including the ICICI Bank, the Life Insurance Company of India, the National Bank for Agriculture and Rural Development and the National Stock Exchange expects to start introduce cash and futures trading in bullion (for up to three months forward) by autumn 2003. Options trading is expected to be introduced towards the end of 2004.

NCDEX also plans also to introduce a gold index and trading in the index at a later stage. Meanwhile the Indian press is reporting that the Multi Commodity Exchange (MCX) is planning to commence business by September, offering a range of contracts including gold. HDFC Bank will act as the clearing bank for the Exchange. Meanwhile ScotiaMocatta has recently trebled the size of its team in India, while HSBC is also expanding its bullion activities there.

Other products are coming--
ICICI Bank is launching a range of gold bullion products, including ICICI Bank gold accumulation plans, gold accounts for private investors and lending facilities for local manufacturers. The bank expects to have 200 branches with gold retail facilities by the end of this year. The bank is already selling ICICI gold coins, at 140 branches all over India, which were launched last December and are the first retail gold investment products to be sold by a local Indian bank.

The terms of the accumulation plan, which is expected to launch this year, are that an investor may deposit Rs1,000 ($21 at prevailing rates in early June), for which the bank will deposit 1.5g of gold to the account. Once the amount deposited is equivalent to 10g of gold (at a predetermined gold price), then the customer may take delivery of a 10g gold coin.

Mr. Amitabh Chaturvedi, head of the bank's retail channels and liabilities group, described the programme as working "like a forward contract where gold will be priced at a pre-determined rate, that is, the day he starts depositing money on that account."

*****[Randy's note: This is very nearly the same sort of price hedging that some in the marketplace have fought tooth and nail to be rid of, largely convincing the miners to ween themselves off of this destructive activity. Now the activity looks to be carried forward by a new group of numbskulls -- the gold buyers (and would be gold owners) who were otherwise finally in line to benefit from a falloff in hedging and derivative-based pricing. Ain't that a kick in the pants?]******

Other banks, both nationalised and private, are planning to launch gold coin retailing and gold savings accounts soon. From 1992 to 2002 inclusive, India accounted for 26% or almost 960t of the 3,575t identified as gold bars bought for private investment. Along with Japan at 777t, these two account for almost half of the world's physical gold investment bar purchases. World Gold Council research has shown that consumer interest in coins and bars is often regarded as a precursor to an eventual jewellery purchase; it also shows, however, that the potential to make gold coins and bars the preferred choice for savings (apart from bank savings accounts) is extremely high.

At the start of this year, Indian private savings in bank deposits totalled Rp 938,286 crore (one crore is 10 million, which implies a dollar saving level of just under US$200 billion). Banks that are prepared to develop a full range of bullion products have the potential to tap a vast store of wealth. The gold market in India may be an old one, but it has considerable scope for growth.

The recent changes in the regulatory environment should be a major help in stimulating fresh products and new demand; indeed some of the top mutual funds, along with the World Gold Council offices in India, are working closely with the regulators to introduce a gold fund into the Indian markets.

END EXCERPTS

While there are some elements of this that can be viewed as very positive, there is also much that opens the door to abuses and systemic risk, revealing that the short-sighted greed of certain paper-dominated institutions is blind to the historical lessons most of us have learned on the path toward long-term well-being for both the individual and society in general. And if the motivation of short-sighted greed is not on the mark, then we can chalk this up to a final paperizing act of sheer desperation as the bullion banking (derivative) business is waning in London.

That's probably more than enough from me on this. I leave it to the group to carry on with the discussion.

Call Centennial for gold and gold is what you'll get, not an elaborate financially engineered paper proxy.

R.

On August 14, 1914, the western world was sucked into the vortex calledWorld War I. Old alliances, arrangements -- quid pro quos-- acted like a gravity that pulled one nation after another into the conflict. Men marched cheerily to war -- thinking it would be over in a month or two -- as if they had nothing better to do than participate in this sport, called war. But it was a terrible war in which millions of lives were lost and set the stage for the Age of Conflict -- hot or cold -- the Age in which we live today.

Now, in this Summer of Our Discontent, the nations of the world are being pulled into another vortex created by an old economic fait d accompli, an old way of doing things. And just like the inescapable pull of gravity which caused World War I, there is an economic gravity at play for which there appears to be little organized, or effective, resistance....even though many see what is coming.

One of the points made by Barbara Tuchman in her famous study of the conditions leading up to World War I -- The Guns of August -- is that the political and financial leadership in the greatest nations of Europe slid into War without doing much to prevent it. They just sort of shrugged their shoulders and said "OK. Let's go to war", as if they failed to understand -- or purposely over-looked -- the terrible consequences.

I see the same psychology at work in the current economic fray, and it seems no one -- in any of the primary economies -- wants to make the adjustments necessary to prevent gravity from pulling the international economy apart. Perhaps fatigue has set in, but should anyone think that this is the worst of it (the bond market debacle, declining dollar, etc), think again. There's another phase to come after the period of fatigue. That's called the collapse. Now I don't know whether we are going in that direction, and I hope we are not, but let's face it, those in power today have a great deal in common with those in power in 1914 -- the ones who failed to visualize the consequences and lacked the heart to stop it, or worse, have decided that there's nothing much that can be done about it, but ride it out.

http://biz.yahoo.com/rf/030814/markets_precious_comex_1.htmlNEW YORK, Aug 14 (Reuters) - COMEX gold rose toward its July high early Thursday, ignoring a firm but range-bound dollar, as a search for safe miches in the market spurred mounting bullishness in the precious metal.

With the bond market in the dumps and stocks wanting yet more proof that the economy is pulling out of its prolonged slump, investors have been turning to gold and gold mining companies as one of the few sectors with potential.

...Another drop in the 10-year U.S. Treasury bond pushed yields to their highest in a year, fanning jitters that the bond market rout could undermine a nascent economic rebound.

-------(from url)------

Physical gold is the right tool for the right job. You can't protect your wealth against a paper crisis with yet other paper.

R.

http://focus.comdirect.co.uk/en/detail/_pages/charts/main.html?sSymbol=ZBU3.CBTLook at the volatility in the bond action today - do you suppose the Fed is buying when they reach a critical level?

I admit that I turned on the Boob Tube and turned to the CNBC channel. I was surprized to see them with a chart of GOLD, so they suckered me in, and I turned "ON" the volume to hear what they were saying !

THEN they brought in their EXPERT, and at first sight, I knew exactly what he would be saying !
IT was an ORC with a big smile !!! All the Hobbits screamed, and ran for their weapons !!!

Mr. Gotthelf, then proceeded to tell about all the reasons that GOLD would NOT increase any higher in price !
That is when I turned off the CNBC channel to the Disney channel to calm the nerves of all.

I have magically removed the CNBC channel from my TV.
NEVER AGAIN !
<;-)

http://biz.yahoo.com/rf/030814/markets_fed_openmarket_2.htmlReplacing yesterday's loose overnight RP add of $6 billion (priced largely at 0.945% with a stop out as low as 0.93%), the Fed today provided the banking system with $8 billion in reserves through overnight repos and $7 billion through 28-day repurchase agreements, both of these operations priced nicely in line with the FOMC target, at a comfortably thin shade over 1 pecent.

Gandalf, with monetary officials' ability to emit a stream of new monetary units backed by profligate government deficits, one must wonder how a talking head on CNBC can keep a straight face while saying that gold will not increase in price. Maybe he is behind the attempted paperization of India. If India goes for the paper promises, will they also accept paper monsoons to nourish paper crops? If so, they will surely become in theory the best fed people on earth. Which reminds me, it's almost time to feast on my own futures burger, grilled to perfection with an energy futures contract. Whatever.

Keeping it real.

R.

I was thinking about someone like Mr. Gotthelf who probably licks 37 cent stamps to affix to envelopes making monthly payments on a $1 million dollar home and a $60,000 car, plus pays for skyrocketing health insurance, utilities, homeowner insurance, and a host of other inflationary items. They all have inflated 400 - 700% over the last few decades while gold has remained suppressed. For him to imply $360 is a top proves he is either ignorant or fearful of gold's freedom. I like to write down some of these shill's predictions, they are hilarious to go back and review later. My favorite was Allen Srenka of Edward Jones who in Sep. of 1999 said "If gold is signaling inflation I'll kiss a pig. This 10% correction (in stocks) is a buying opportunity".

Here Red, Here Red.Here chick, chick, chick.

Slingshot--------<>

http://www.usagold.com/DailyQuotes.htmlexcerpts:

New York spot gold settled higher at $365.80 an ounce, up $3.90 an ounce from yesterday's close.

Gold gained on Fund buying in recent trading in spite of a firmer U.S. dollar, however, precious metals also gained on renewed terrorist threats and a weakening bond market. Even though the trade deficit data for June narrowed slightly it was noted that a new record yearly deficit will likely be set this year adding to doubts about continued dollar strength over the long term.

---end note--> Have a good trip Jon, and hurry safely back.

R.

http://quote.bloomberg.com/apps/news?pid=10000081&sid=adIuSa5nS1.8&refer=australiaAug. 14 (Bloomberg) -- Gold futures in New York rose to a 10- week closing high after a report showed an increase in U.S. producer prices, signaling a possible increase in inflation and boosting the metal's appeal as a hedge against higher prices.

...``We are recovering, so we are going to see better physical demand'' for gold, said David Hightower, president of Hightower Futures Research in Chicago. ``We do have a chance of inflation, given such low interest rates.''

-----(from url)----

While bonds' fixed interest payments and secondary market discounting on principal value make them unattractive investments to hold while the government does what it can (essentially limited to printing things) to jump start an economic recovery, gold remains the right tool for the task at hand -- wealth preservation. And as the price is seen rising faster than most other things you would care to own, wealth appreciation is an added bonus to holding gold -- up 16% since this time last year.

R.

http://pub38.ezboard.com/fdownstreamventurespetroleummarkets.showMessage?topicID=7487.topic
Snippit:

NEW YORK (Reuters) - A massive power outage swept across swaths of the eastern United States and Canada on Thursday, leaving sections of New York City, Detroit, Cleveland and Toronto without electricity, witnesses said. Subways in New York came to a complete halt, and power was out at all three of the New York area's major airports. Commuter train service also came to a halt, and cellular telephone service was disrupted. CNN reported a fire at a Con Edison power plant in Manhattan. The Oyster Creek nuclear power plant in Forked River, New Jersey was not functioning, according to people familiar with the plant's operation.


Black Blade: This exposes the vulnerability of the electrical grid to possible terrorist attack as well as the limited availability of power generation. Subways and buses are not running as workers are walking across bridges wondering how to get home and off the streets of New York before nightfall when the criminal element emerges to rule the city (so much for the wonders of mass transit). The three major New York airports are shut down and Wall Street reports that some trading data may have been lost on the major exchanges. Hospitals are currently running on emergency power generators. A major BP refinery in Ohio has shut down and the company has no idea of when they will restart operations. This event is sure to spark discussion over a national energy grid and the environmental policies that have restricted development and upgrade of the energy transmission network (pipelines and wires).

I know that most of you already know but I also know that some never turn on the television. All of New York to Chicago, parts of New England, CT. New Hampshire and parts of Canada. The government says it's not a hostile act but, if it were, what do you suppose they would say? Anyway, if you have power, it's all over the tube.
Rich

Just came in from mowing and headed for the fridge for my first brew. No light in the fridge. No lights in the house, town, county, state, etc. Went to the barn to start the generator (fourth time this summer) and checked the TV which says we have apparently a cascading outage starting in Canada? Whatever.
The electric grid is not supposed to do this. Not enough spinning reserve probably because of high NG prices. The system gets more unstable with high demand. Or maybe somebody with to many T-bonds dumped the system. Oh well, beer's cold, pumps working and I'm back online.
Cheers,
Boilermaker

I live just outside of toledo.Half the city north of the maumee river is out,my brother is working in manhatten this week,he is a comedian he is on the road alot.21

I wonder what the markets would have done if this happened earlier in the day.I rember reading about sensitive points in the power grid of the nation and how if one went it would be bad.I think there is another strategic point around minnesota or around there.This is it I am buying a generator any one have any suggestions on make model and features.21

http://www.atimes.com/atimes/Global_Economy/EH14Dj01.htmlexcerpts from "Global fund management: caveat investor"
By John M Mulcahy

"Mutual funds exist in a culture that thrives on hype and withholds important information in a cutthroat business that regularly misleads investors." Bridgeway Funds founder John Montgomery's submission to a US congressional committee last June reflects a schism in an industry that manages more than US$11 trillion in savings globally.

The fact is that the mutual-fund industry, if not the whole financial services industry, is in turmoil as a result of the three-year global financial collapse that began in 2000. Market dynamics are changing and swinging towards other investment vehicles. In the battle for the stewardship of the world's wealth, the extremists are on the rise, with absolute-return, actively-managed hedge funds trebling in size since 2000, while low-cost index funds now represent almost 13 percent of stock fund assets, up from 2 percent in 1990.

Throughout the 1990s, they were the stewards of a huge amount of the world's investable money - some $8 trillion of which disappeared in the market crash. The degree of fury now directed at their industry is typically in inverse proportion to its performance. It is no coincidence that they are now under intense scrutiny.

..."It's not our fault if investors insist on believing they can beat the market," is the active fund manager's defense.

...Fund management's biggest competitor is direct investment by individuals in stock markets, a process that has been streamlined in recent years, partly by the advent of online trading, and also by reductions in commissions charged to retail punters.

----(from url)-----

Well, there you have it. If people are tired of letting a professional manager lose their money, they can as surely do it directly themselves.

This truncation and liberal application of Mulcahy's concluding paragraph gets back to the issue I raised regarding the evolving operating standards for the gold market in India:

"The question is whether Asia will learn from the experience of the US and Europe, and leapfrog the less-efficient characteristics of asset management [...]. Unfortunately, this is unlikely, as the fund management industry will opt for the model that most suits its own profitability, rather than the investment mechanism that best suits investors. That is how fund managers [and bullion bankers, too] are rewarded, and that is how they will operate, if allowed."

Keep it real, and do not settle for less than the !clink! of solid gold to round out your portfolio.

R.

My work has often involved power equipment, mainly generators and power trowels for concrete finishing. Small engines used to be Takompsas, Briggs and Stratten, Wisconsins, and such until Hondas entered the market. Honda small engines (5 and 8 horse) are simply the most reliable although not the cheapest.
Rich

The BP refinery and the Sun refinery both shut down BB.People thought they were both on fire because of the burnoff saftey system.Tv news came on and annouced they were not on fire.I hope you have some posts tonight on this situation and causes BB.21

When the dust settles on this event the diagnosis will probably be;
Not enough spinning reserve and not enough transmission margin. This is akin to "just in time" inventory systems. No margin for system stress caused by high demand coupled with the breakdown of a major component. Deregulation has created a disincentive for "spare capacity" in the system. No one gets paid for "standby" capacity. This is a reality of a totally competiive market. Sometimes the product doesn't get delivered because the supplier is trying to turn a profit and doesn't get paid for security.

Total meltdown of the FINANCIAL SYSTEM.

Can't happen?

Who says?

Trillions of paper derivatives, one locks up, it could set off a avalanche of financial switches, heading right towards our federal reserves......!!!

It's a challenge to bring back a system that gets dumped like today. The nukes have to go through prestart routines to check all safety systems. The fossil steam plants can get back online in a matter of hours if they have backup power for boiler feedpumps and other station services. Gas turbines and diesels are the easiest and quickest to restart but have very limited capacity. The transmission grid has to be brought back only as quickly as generation can be restored.
I'd guess a day for full restoration for residential/commercial, more for industrial. The US power system is shaky, not as bad as Baghdad but definitely not ready for our current economic boom.

Boilermaker

I have noticed ususual price action in oil in the last month. I suspect (but have no evidence) that at this point, the oil market is easier to manipulate than gold, bonds, dollar, DOW, or Nasdaq. On days when the big boyz what gold to go down, they signal it with an unusual jerk down of the oil futures. Later, on a day that "does not matter", the price of oil is allowed to rise slowly so the signal can be used again.

I understand that the oil futures traded in NY are based on the price of oil in NYC harbor, based on production of local refinaries. If the refineries have a disruption, there is likely to be a large spike in the price of oil. Or they may suspend trading in oil. In either event, tommorrow gold will trade without being compared to the price of oil. This may make it easier for gold to make a breakout.

Of course, much depends on how well all the systems are brought back on line.

To all those affected by the blackout (and those in the European bake-off) take care of yourselves. We certainly live in interesting times.

Tomorrow is expiry of options I believe (Triple Witching). If the blackout is not resolved by the open of trade tomorrow it could get very interesting. A late open could be quite volatile and wacky so say the least. It has been suggested that energy futures may go wild tomorrow as the black out has stimulated debate on the state of the nation's energy grid. "Interesting Times"

- Black Blade

http://biz.yahoo.com/rb/030814/power_reactors_1.htmlSAN FRANCISCO (Reuters) - The Nuclear Regulatory Commission on Thursday said nine nuclear reactors in four U.S. states were shut following a massive blackout that hit the Northeast United States and Canada.

"At this point, we have nine reactors that are offline. And there is no timeline as to when these will return to service," NRC spokesman Scott Burnell said.

------(from url)-----

Like something from Catch-22. "We wouldn't have a blackout if our power generation facilities were operating, but you see, this blackout has put us down..."

Meanwhile, Citibank and JPMorgan Chase both have announced that their ATM networks are down in the affected area.

As financial institutions such as the Bond Market Association convene emergency meetings to discuss the implementation of contingency plans, we can all chalk this up as yet another reminder of the various administration risks to which standard financial instruments are vulnerable.

The value of gold in your hand does not rely on the integrity of a database or a power grid, or counterparty performance. It can't be easily wiped out like so many digital ones and zeros.

R.

The word is that lightening caused the blackout and set off a cascade effect throughout much of the eastern grid. I recall the big blackout in the northwest a few years ago was caused by a gray squirrel that committed suicide on a transformer resulting in a cascade effect. ;-)

Apparently several oil refineries are down now with the most recent reported is the Imperial Oil refinery in Canada. I hear that several other refineries have shut down and it is expected that petroleum product futures are expected to go wild. Energy traders are already talking about expected price spikes in gasoline, natural gas, distillates, etc. tomorrow.

Even after electrical power is restored it will be slow going to restart refinery production after system checks and possible maintenance requirements are completed.

- Black Blade

off to the gym!

with the harvest moon slowly appraoching, ( not the next full moon but the one after that) and with the blackout today this demonstrates who is an ant and who is a grasshopper, if u where effected, and are/were a grasshopper u where worried> if u are/were the ant you are relaxed knowing you are prepared, generator, extra gas, battery powered radio, extra food ( so on and so forth as said many a time on this form) i think it was a nice drill ( how convient to have no power during rush hour when everyone depends on it and will be effectd)
but rember its once again its time to decide if u want to be an ant or a grasshoper. the choice is yours!

Anyone else notice that it only took the Homeland Security folks 17.5 seconds to determine that this was not a terrorist act. (Uh oh -- I'm starting to sound like Mogombo Guru)

Got Physical Gold?

The big boyz really wanted the price of gold to go down today. It didn't. Here is an explanation from Bill Murphy (I hope this is short enough to be fair use):

"Massive Middle East buying has propelled gold higher the past couple of days. This news comes from a reliable source who does some of their business. Word is the Arabs expect a big problem to occur in Saudi Arabia in the near future."

If oil futures go wild tomorrow, and if the Middle East thinks that the US cannot respond to "problems" in Saudi Arabia, expect more panic buying of gold.

Any thoughts?

http://biz.yahoo.com/rb/030814/power_outages_markets_5.html
Snippit:

NEW YORK (Reuters) - U.S. financial markets were stunned on Thursday when a blackout hit the east coast of the United States and Canada, cutting power to Wall Street dealing rooms, but Friday was expected to be business as usual.

The dollar dropped and U.S. bond yields tumbled in a flight-to-safety rush as witnesses reported power outages hitting New York, Detroit, Cleveland in the United States and Toronto and Ottawa in Canada. "(Treasuries) prices (were) bid higher because people are obviously uptight when things like this happen," said J.P. Marra, managing director of government trading at Lehman Brothers. "We're completely in the dark here -- literally!" he said.

"We're trying, we're on auxiliary power but we're struggling to do what we can," one fixed-income trader said earlier. In the meantime, investor jitters over the blackout pushed the dollar lower against the euro. "Bonds are bid and people are selling the dollar," said Paul Podolsky, currency strategist at Fleet Global Rate Markets in Boston, earlier, where power was on and operations were normal.


Black Blade: The prez sez he will address the nation at 8:30 pm (est).

Electricity is similar to oil for our economy. Things stop when electricity stops. There are no storage piles or tanks holding electricity. The total electrical capacity of batteries hooked into the system would operate for a few seconds or less. You must produce electricity on demand, no storage, no inventory.

This fact means that the paper market for electricity has no backup, no stockpile. The PPT cannot fix this market. The problem that happened today will have far reaching effects on the economy, mostly a wake up call that "all is not well". We'll see some positive spin on this event but be assured the energy piper must be paid and that does not bode well for this economy.

I am served by First Energy, the folks that let their nuke, Davis-Besse, fall into disrepair and who have consistently failed basic standards of system reliability and safety. For many decades they have been operated by accountants and lawyers. Their system has always been substandard and they have the highest power prices in the Midwest. This is my fourth outage this summer.

Venting from Ohio.

Boilermaker

http://www.zephreport.com/default.tplSome one is relating this blackout to a ? Geothermal/ Magnetic field event in the earth .....kind of jibes with some other articles I've been seeing on increased Magnetic field in our solar system of all planets related to higher energy area our solar system is moving into .....

Article at related site cites another occurence of this type in 1989

Sir Cometose

Geomagnetic storms can sometimes cause power blackouts. The "geomagnetic storm" is a relatively major disturbance to the Earth's magnetic field which induces electrical currents in the Earth and, in particular, in large scale conducting systems (like electricity grids and pipelines) on the Earth's surface.

In the case of electricity grids, problems can arise from "half cycle saturation" in transformers, due to the induced currents adding to the normal current in one direction (half an alternating cycle) and causing the transformer to fail. Such instances are rare and happen only during the most intense geomagnetic storms. A quick check of some agencies that provide "warnings" of geomagnetic storms does not suggest that any major geomagnetic event occurred or is in progress. That may change as reports come in, but it should be evident by now.

If the power outage was related to geomagnetic disturbances it should be evident to anyone living in the north of the USA or in Canada - you should be seeing magnificient auroral displays (northern lights) tonight - if not, then there is no magnetic storm and this cause of the power failure is unlikely.

Geomagnetic storms are triggered by southward-directed magnetic field in the solar wind and are generally related back to events on the Sun (flares, filament disappearances or coronal holes).

Sorry Admin for this off-subject post, but topical under the circumstances.

:-)

Sundeck

For the week ended 8/13/03 repos of $17.7 bil. were DOWN $4.8 bil. But for the week ending 8/20/03 they'll be UP. For the week ended 8/13/03 reserve balances with Federal Reserve Banks (factors supplying reserve funds minus factors absorbing reserve funds) of $7.9 bil. were DOWN $5.6 bil. But for the week ending 8/20/03 they'll be UP.

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=5&u=/nm/20030814/bs_nm/economy_jobless_dc&sid=95609869
Snippit:

WASHINGTON (Reuters) - The number of Americans filing first-time claims for jobless benefits edged up slightly last week, the government said on Thursday in a report that nevertheless offered some hope the economy may soon start generating jobs. Initial claims for state unemployment benefits rose a slim 2,000 to 398,000 in the week ending August 9, the Labor Department said. The figures were close to expectations on Wall Street, where economists had expected claims to hold steady at the 390,000 level originally reported for the August 2 week. Initial claims have held below 400,000 for four consecutive weeks. Economists say claims below that level indicate some job creation.

Black Blade: It's with some amusement that I listen to the hoot and howl of the Wall Street clowns and the CNBC infomercial carnival barkers as they announce initial claims have held under the all important 400,000 level for 4 straight weeks. The carnival atmosphere may be a bit premature. First off today the data revealed that there were 398,000 first time claims last week. But as we all know the data is always upwardly revised, so this week's data is most likely above 400,000. Secondly, the first two weeks of this streak was "seasonally adjusted" data that was smoothed downward and massaged to reflect the seasonal maintenance shut downs in the nation's factories (mostly attributed to the auto sector), so the reality is that the level was again above the 400,000 level. Well, you can't keep a good spinmeister down so don't expect this information to be announced by the financial media when next week's revised data is released.

http://www.washingtonpost.com/wp-dyn/articles/A55870-2003Aug13.html
Snippit:

Fannie Mae, the giant housing finance company, said its risk exposure to rising interest rates grew significantly in July. The slowing of mortgage payoffs from the refinancing boom and a spike in mortgage rates in July lengthened the overall maturity of Fannie's massive mortgage portfolio relative to the maturity of Fannie's own debt. That means that Fannie on average will have to refinance its debt sooner than its interest-paying mortgages, a situation that could cost Fannie money if interest rates continue to rise. Fannie said yesterday that the gap between the maturity of loans it owns and that of debt it has issued jumped to positive six months at the end of July. That is the biggest positive "duration gap" Fannie has had in more than three years. "The bigger the gap, the bigger the risk that if rates go up further" Fannie Mae's profit will be affected, Igor Krutov, an analyst at Vontobel USA Inc. in New York, told Bloomberg News.

Black Blade: Fannie and Freddie have been selling Treasuries to cover the losses and offset in place hedges. The derivative book is huge (well over a $trillion) at Fannie Mae and if rates rise quickly we could see a true crisis develop � can you say LTCM? Anyway, it appears that the market is saying buckle up because the bond market has topped out and with Fannie and Freddie selling bonds into an already saturated market it looks to get much worse.

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=6&u=/nm/20030813/bs_nm/economy_mortgages_dc&sid=95609869
Snippit:

NEW YORK (Reuters) - The number of applications Americans filed for mortgage loans dropped last week to its lowest level in more than a year, even as mortgage rates subsided from their recent spike, according to an industry survey. Although overall mortgage demand remains high on a historical basis, the previously red-hot level of refinancing, which has put money into consumers' pockets, has cooled rapidly. Applications for refinancing made up 55.8 percent of all new requests filed last week, down from 72.1 percent a month ago.

The recent rise in mortgage rates has hit refinancing -- down 67.5 percent since its peak in May -- much harder than demand for loans to buy homes, down around 10 percent. Strong housing demand has boosted consumer spending and construction jobs. Rising home prices have spurred homeowners to borrow against, or "cash out," the value of their homes to spend more or to pay off more expensive personal debt like car loans and credit card bills. It is crucial that other areas of the U.S. economy pick up steam in the second half of the year to compensate for the slackening in demand for mortgages.


Black Blade: Another nail in the coffin for Fannie and Freddie? Consider that mortgages and refis have figured in the profit picture for the financial sector and the bulk of increased earnings for the S&P has been from the financial sector. That "economic recovery" is looking more elusive than ever.

News, That could-be the news:

The twenty hour blackout that darkened stores and silenced cash registers in the Northeast on Thursday was the latest unwelcome blow to the struggling recovery efforts of the U.S. economy.

Economists immediately predicted that retail sales might swoon as much as a tenth of a percent do to the consumer lock down, and worried about any lasting downtrend that might be initiated. Sociologist were even more concerned with the psychological effects that a sudden forced withdrawal from shopping would have on American consumers.

"We are keeping an eye on the situation." Stated Treasury Secretary, Jack Frosty. "We believe this cool-down will be a short term phenomenon". But he added, "We are prepared to do whatever it takes to assure Americans that they will be able to spend their money. Right now, we are discussing a plan that will allow consumers low interest loans tonight, in order to fly to all areas of the country not affected by the blackout. And once there, we will guarantee loan packages of up to five thousand dollars, so that Americans may continue to spend money as they choose."

The Federal reserve is also burning the midnight oil, after finding a few old lanterns in a nearby second hand store. "The situation is well under control." A spokesman assured. "This may ease the unemployment situation, as we're scouring the rolls now to find able hands to pass out cash at crippled ATM locations. This program will begin as soon as the Cigar boxes to hold the money arrive from the Garcia Vega plant in Florida that went bankrupt a few months ago."

In Overseas News:

China's exports were seen backing up on docks and in factory warehouses, as the exporting behemoth began to feel the effects of the power-outage-crippled U.S. consumer. Lamented factory supervisor, Hut Mud Doh, "These Walmart people they don't care what happens to us. We could starve, what do they care?" He was being sent home from one of the many Thong factories operated in China by the world's retailing giant.

Your reporter: Gdome

Generator
For the past four years I have been running a Coleman 5kw 10 hp Briggs and Stratton with cast iron sleeve. It is the extended run model. Has low oil cutoff and capable to flash the electric field to correct polarity. Two 240 and two 120 outlets. Surge watts are about 6200. Maintenance is low . Change oil, sae 30 at 50 hours run time and clean filter. Five gallon gas tank and with light loads approaches 7-8 hours run time. Very heavy with full tank of gas. Wheel kit. ADD GAS stabilizer. Use it at the hunt camp and so far not one problem. Price $485.00 plus tax and Wheel kit, $29.00 when I purchased it.
Slingshot------------------------<>

http://story.news.yahoo.com/news?tmpl=story2&u=/washpost/20030815/ts_washpost/a59539_2003aug14&e=4
Snippit:

NEW YORK, Aug. 14 -- An enormous power failure this afternoon blacked out population centers from New York City to Cleveland, Detroit and Toronto, crippling transportation networks and trapping tens of thousands of people in subway cars, elevators and trains and on highways. The failure cut the electricity supply to millions of people in a 600-mile swath between New York and Detroit, shutting down entire cities across the Northeast without warning and stranding workers and travelers in the heat. The blackout will be recorded as one of the most extensive in U.S. and Canadian history. It shut down at least 10 major airports and 10 nuclear power plants in at least seven states and Canada's Ontario province, and it forced hospitals, prisons and emergency service providers to switch to generator power. In a calm but challenging evening commute, motorists found themselves trapped in gridlock, and pedestrians took to highways and bridges. ATMs stopped working, and cell phones became unreliable under the overload. Some jurisdictions declared curfews and sought help from the National Guard. Shows and sporting events were canceled.

There were conflicting explanations about the cause but no doubt about the short but sharp impact. Ford Motor Co. alone lost production at 21 factories. Amtrak service was canceled from Newark to Boston. Computers became useless to untold thousands who did not have battery power. "You realize just how dependent we are on electricity," New York Mayor Michael Bloomberg said in his shirtsleeves at a news conference at which he urged people to drink water. The Pentagon launched two F-16 fighter jets to patrol skies between New York and Washington and put other military aircraft on alert at eastern U.S. bases, defense officials said. Waves of pedestrians clogged bridges out of Manhattan and took possession of the main roadbeds, as well as elevated walkways. New Jersey Transit and the Long Island Rail Road canceled all service, Manhattan tunnels were closed or operating only one way, and the Port Authority bus station closed down. Boos sang out from the sea of pedestrians when Bloomberg arrived at the Brooklyn Bridge with accompanying security and media that threw another obstacle across the path.

Extra New York police and firefighters were ordered to work, and they were restoring power to a hospital in Brooklyn that did not have generator power. Shelters were set up for stranded commuters. Traffic was blocked from entering Manhattan to allow people to evacuate, while many subway riders became covered in dark muck as they climbed from tunnels. New Yorkers lined up to buy flashlights and candles, women removed high heels to speed their evacuation and some citizens served as traffic cops to keep vehicles moving.

Washington was not directly affected by the blackout, but political figures began to ponder the effect on energy policy of the massive blackout -- and the failure of all safeguards. One Democratic group said Republicans blocked a plan in 2001 to provide a $350 million loan guarantee program to improve the nation's power transmission reliability. Bush used the occasion to repeat his call for improving the nation's energy policy; his legislation has been stalled in Congress. Both parties agreed the nation's power grid is badly antiquated. "We're a superpower with a Third World grid," said Democrat Bill Richardson, the New Mexico governor who was energy secretary under President Bill Clinton.


Black Blade: I recall all the claims by the Wall Street trolls and pied pipers and even Fed Chairman Alan Greenspan a couple of years ago when they said that energy is not all that important as it's only a fraction of the economy. This puts a whole new light�.uh, I mean, points out the fallacies of that idea. Bill Richardson's comments above are dead on. We do have a Third World energy grid. There have been few improvements since the 1930's and certainly none since the 1970's. It was only a matter of time of course before something like this happened. It does point out how vulnerable the energy grid is to terrorist attack. I see reports on the tube about New Yorkers flocking to stores stripping the shelves of candles, batteries, can food, bottled water, etc. As I have repeatedly pointed out here on this forum � get out of debt, stash cash, accumulate gold and silver portfolio insurance � and as we see what happened today � start a storage program of nonperishable food and basic necessities. Preparation is key. Those who have prepared (the ants) didn't have to beat back the panicking crowds (the grasshoppers) looking for the most basic essentials of life. If you are prepared you can sleep soundly at night � let the other guy lose sleep and do the worrying.

They were quick to put the word out that it was not terrorist caused, but they still haven't found out what created the problem. Can't wait to hear the spinmeisters stories on this one!

http://story.news.yahoo.com/news?tmpl=story2&u=/ap/20030815/ap_on_re_us/blackout_vulnerable_us&e=6&ncid=
Snippit:

WASHINGTON - The blackout that turned out the lights for millions of Americans and Canadians on Thursday once again showed how the interconnected engines of modern life are vulnerable to massive disruptions. "It shows us we have tied together so many systems to build a high quality life, and that creates its own vulnerabilities," said James Gilmore, the former governor of Virginia and chairman of a terrorism panel formed by Congress. The electric grid is perhaps the most vulnerable of the country's critical systems. Grids are interconnected and, unlike natural gas that can be stored, electricity must be produced in real time, when it is needed.

New Mexico Gov. Bill Richardson, energy secretary during the Clinton administration, said the blackout underscored the need for Congress to require national standards for the reliability of the electric power system. "In my view we're the world's greatest superpower but we have a Third World electricity grid," Richardson said. "We have antiquated transmission lines. We have an overloaded system that has not had any new investments and we don't have mandatory reliability standards on utilities, which caused this problem."

Larry Brown, one of the institute officials who advises the government on electric grid vulnerabilities, said there are three reasons that better facilities have not been built: the cost, environmental opposition and the unwillingness of communities to locate such facilities near homes. Brown said the energy bill now before Congress would provide needed financial incentives. But that will not stop lawsuits by environmentalists or local opposition. "Things like this can wake people up to the reality that society relies on electricity, and expects electricity to be reliable. But reliability depends on facilities," he said.


Black Blade: A Third World energy grid indeed. Much of the problem lies in the opposition of the public, politicians, regulators and the environmentalist industry to allow the upgrade and expansion of the energy grid. It was only a matter of time before this happened and it will happen again and again. By next week this will be largely forgotten. It does point out how vulnerable the US and Canada is to a simple low level attack on the energy grid.

Instead of throwing good money after bad by upgrading a decrepit power system (and putting up with more oil wars and nuclear waste), why isn't this nation building a new system....one built on a combination of wind, solar, and hydrogen?

Simply

My career, when I was just tired, instead of re-tired, was working for the local power company involved with building and maintaining redundant (power system) restoration dispatch computer systems. I spent the first 17 years of my career building these systems, and the last ten dismantling them. The company was taken over by another from the Northwest, whose eyes were bright with greed from the profit prospects of "de-regulation"...sound familiar, somehow? Power restoration was a foreign and expensive, and therefore unneccessary concept to these people. Oboy, I remember thinking and discussing with my coworkers, here we go with another historical cycle of relearning and destruction...sure enough, they couldn't make money when their generators crapped out on them because they thought they could save a few bucks and not overhaul them on schedule...my company was not unique, when greed enters the picture, so does stupidity, and on a massive scale. The entire country, not just the power companies, is infested with a massive backlog of stupidity, which is going to be very, very painful to get rid of.....

Simple answer, the costs are huge. Solar and wind are extremely expensive in comparison and hydrogen must come from hydrocarbons (oil and natural gas) since extraction from water requires more energy in than comes out. There's no free lunch.

- Black Blade

quote from Edward Yourdon & Jennifer Yourdon, "Time Bomb 2000", Prentice Hall, 1998, pp. 61-62;

With little doubt , electricity is one of the fundamental linchpins of modern society. If power shuts down, a great deal of the rest of society shuts down with it.
...
A good example of this is the outage that occurred on July 3, 1996. {followed by excerpts from news reports from which The Invisible Hand excerpts:)
" Utiliy officials prepared today to investigate the outages, which came amid heavy usage in the heat wave. "Having an interconnected system really makes for more efficient use of our natural resources and keeps the cost down" said Lynn Baker, spokeswoman for Bonneville Power Administration, which oversees the power grid in the Pacific Northwest. "But it means when something goes wrong, it can cascade through the system" "

http://www.nymex.com/jsp/news/hot_topics.jspHot Topics
Important Information about NYMEX ACCESS and ClearPort
The New York Mercantile Exchange will delay the start of electronic trading until 10:30PM

http://quote.bloomberg.com/apps/news?pid=10000103&sid=aNW9S6Iwpkpo&refer=news_indexAug. 14 (Bloomberg) -- The New York Mercantile Exchange halted electronic trading because of a power outage affecting cities in the U.S. and Canada, including New York and Toronto.
The exchange, running on backup power, stopped electronic trading after reports of the power outages shortly after 4 p.m. New York time.
``We're concerned about the ability of other people to get access to the market,'' spokeswoman Nachamah Jacobovits said in a telephone interview. ``We're calling customers to determine how many still have access to the market.''

http://www.washingtonpost.com/ac2/wp-dyn/A60181-2003Aug14?language=printer
American Banking Association spokesman John Hall said preparation for the feared Y2K computer bug several years ago "left banks in pretty good shape. They have built a lot of redundant systems."

http://www.washingtonpost.com/ac2/wp-dyn/A61532-2003Aug15?language=printer"The office of Canadian Prime Minister Jean Chretien said a severe outage at a Pennsylvania nuclear power plant may have caused the massive power blackout that cascaded over an area of 3,600 square miles in the U.S. Northeast and Ontario"

http://money.cnn.com/2003/08/15/markets/stockswatch/index.htm?cnn=yesSNIP:
The big problem will be getting market participants to the places where they do their trading. New York's subway system won't be operating, and driving in the nation's largest city will be difficult without traffic lights.
==
Since 911 Nymex closes at 1:30 pm.
Is the present outage going to be Another alibi to strangle gold?
If gold opens today at 10:30 am in New York, that's 5:30 pm in London, is London then still open? According to the K-chart, it is. On a Friday, in August?

http://biz.yahoo.com/ap/030815/life_savings_lost_lawsuit_1.html
Retiree Sues Citigroup for Pain and Suffering After Losing $2 Million Life Savings on MCI Stock

Snippit:

WEST PALM BEACH, Fla. (AP) -- A retiree who lost his $2 million life savings when WorldCom stock plummeted amid the company's collapse last year has sued Citigroup for pain and suffering. The lawsuit, filed Thursday against the nation's largest bank, could signal a new option for thousands of Americans who lost their fortunes in accounting scandals. Anthony Amodio claims that he is penniless and ill with heart problems because he was advised to keep his 23,820 shares of WorldCom stock amid claims that the share price would climb to $150, even when it was valued in April 2002 at only $7. The suit would be the first to compel depositions from former WorldCom chief executive Bernie Ebbers, Citigroup chairman Sanford Weill and its former telecoms analyst, Jack Grubman, said Ted Babbitt, Amodio's attorney. The suit blames the trio for recklessly and intentionally inflating claims about the stock's potential, making them millions while countless Americans lost money. "They painted such a picture to me to hold the shares because I was going to make my fortune," Amodio said. "I looked forward to the golden years and now I look forward to the bitter years."

Black Blade: This quite a novel approach. It could open the floodgates if successful. Though I agree that Citigroup is not much more than a boiler room and the individuals named are crooks, but the plaintiff has to take some of the blame for not doing his own research. I mean it's not exactly rocket science.

CNBC reports smoke billowing from the New York Stock Exchange and fire trucks on the scene. No more information available. Shredding party got out of hand maybe? ;-)

- Black Blade

It turns out it's only smoke from the back up generators. There's no power yet and the generators will be used so the NYSE can open today.

- Black Blade

I remember reading an article several years ago about a massive power cut in NYC. One of the aftershocks was that there was a significant spike in the birthrate 9 months later.

Now, the current outage (sorry !) was much bigger in scope, so we can reasonably expect a much bigger spike (apart from those couples who took the unexpected relief from light pollution to get a really good look at Mars). So with all those extra gold birth crosses and baby's first silverware (yeah ! really silver !) there is going to be a significant surge around May next year.

As ever, you heard it first at the forum !!
C!

Clink! The time they had a power outage that resuletd in a big spike in the birht rate it was winter. You know cuddle together to keep warm thingy! I suspect this time the birth rate might be a little lower considering the 90 degree weather.

Is that the same PMO that has been responsible for all the other "gems", including, but not limited to, being told to stay away from NYC by the mayor's office after 911, and also not attending King Hussein's funeral due to health reasons and being found skiing in Whistler?

The information may be right, but I prefer to get it from a RELIABLE source.